Stamp Duty in the United Kingdom
Stamp duty in the United Kingdom was increased on overseas investment. Prime Minister Theresa May lifted the councils' strict cap on fund borrowing. The Prime minister said the housing crisis was one of the biggest policy challenges in the country, and there was no reason to stop the council from building new homes.
Conservative sources claim the new regulations will allow the councils to get an extra £1 billion for building new homes. The housing charity Shelter said the new rule would allow the councils to build 27,500 new social homes compared to 5,000 in over a year.
Labour spokesman said the injection of £2 billion would be able to provide funds for only 5,000 new homes a year from 2016 to 2021.
Regulatory Changes - Stamp Duty Increased By 1400 Per cent Since 1997
Earlier, PM announced an increase in stamp duty on foreign investment; as a result, London housing transactions fell by 41 per cent during this time, mainly due to the increase in stamp duty in the United Kingdom.
Further, new HMO licensing has been introduced, affecting 4 million people living in private rental homes. New rules to protect residents in privately rented homes have been introduced for landlords who let five or more from 2 or more separate households, as they will have to get a license from the local authority to let out.
The new measure targets to improve the living conditions in privately rented European houses, which applies from 01 Oct.
FDI And Impact on Property Transactions
Real estate firms believe it is stamp duty, not Brexit, responsible for London's low real estate transactions. Local buyers believe the investment from Europe, America, and Asia led to the rise in property prices in London, but it is not just London; investors are buying property in Liverpool, Manchester, and other popular locations.
Some of the super-rich and even middle-income earners from Singapore, Malaysia and China are buying property due to sterling weakness, even though stamp duty in the United Kingdom has been increased.
The IBM Global Location Trends 2018 report, published in EY Attractiveness Survey UK for 2017 – 2018, found Manchester was the most booming city for FDI outside London.
It is one of the most liveable cities, and Liverpool is the preferred business city where the investors such as Speke – the biomanufacturing firm, and Daresbury and firms in the health sectors are investing. More business in the market indicates growth in new job vacancies.
Such investment shows the strength of the northern powerhouse, which positively impacted the UK economy. However, the increase in stamp duty will restrict such investments.
The report 'The China Dividend: Two Years In' from Steer Davis Gleave claim there has been an increase by 38 per cent in the number of visitors to the north, at the same time as the growth in the number of visitors to London was 30 per cent.
The students from China grew by 9 per cent in Greater Manchester in the last two years, while the national growth is 4 per cent. This growth has been supported by the Manchester-Beijing Hainan Airlines transit and restrictions in China's real estate market.
During this time, UK-China ties had improved, and the exports of goods to China increased by 28.5 per cent. As a result, the bilateral trade value reached £67.5 billion.
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