UK Election Results 2015: A Boost to the Residential Property Market

Overseas investors can breathe a sigh of relief as David Cameron makes his way back into 10 Downing Street, seizing an unexpected overall majority vote.

The run up to the General Election took its toll on the UK residential property market with concerned overseas investors taking a momentary pause to reflect on proposed policy changes. In particular, the Labour party’s proposals to revoke the non-domicile (Non-Dom) status and introduce a ‘Mansion Tax’ for properties worth over a £2m threshold, forced many non-UK investors to consider whether the UK remained a financially attractive and safe environment to invest in.

Those who are UK residents and domiciled would be liable to pay UK tax on both UK and foreign income and gains. Non-Doms, however, enjoy exemption from UK tax on their foreign income or gains up to a maximum of £2000 unless that income is transferred to the UK.

A Non-Dom is a person who regards their permanent home or domicile to be outside the UK. Whilst there is no legal definition of a Non-Dom in UK law, an individual is usually regarded as being domiciled in the country where they or their father were born in or which is considered to be a permanent home. Alternatively, it may be a country where they have chosen to settle.

Where non-resident Non-Doms invest in UK residential property, individuals would be subject to Non-Residents Capital Gains Tax. That said, with the availability of exemptions and reliefs, each individual circumstance calls for careful consideration. Rest assured, individuals can continue to reap the benefits of the Non-Dom status under the new Conservative government, at least for the foreseeable future.

Moreover, now that the spectre of a Mansion Tax is removed from the market, the agency industry forecasts steady growth with Savills’ predicting a 22.7 per cent rise in prime London residential property prices with a 23.9 per cent rise in prime residential prices outside the capital.

Looking ahead, UK residential real estate remains an attractive investment class with a general rising trend in capital value.

Watch this space for more on investing into UK residential real estate.

 

Sarah Mubashir

The writer works in the Residential Property department at an international law firm.



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