Out-Law News | 29 Aug 2014 | 12:48 pm | 1 min. read
Data from the estate agent shared with Bloomberg and the Financial Times showed that Italian and French investors accounted for the majority of the sales, while the proportion of purchases made by investors from Russia and the UAE fell. Overall, foreign buyers accounted for 40% of sales in the areas defined by Knight Frank as 'prime central' London; down from 50% over the same period in 2013.
"Recent economic data shows there are still fragilities in the eurozone as it recovers from the financial crisis," said Tom Bill, Knight Frank's head of London residential research. "Fears over the eurozone's future have abated, but our data suggests the safe-haven appeal of prime central London property is alive and well."
In its London Summer Review (5-page / 2.4MB PDF), published last month, Knight Frank said that prime central London residential property prices were beginning to slow. The 0.3% monthly price rise it recorded in July was the third lowest rise recorded since January 2011, while annual growth slowed 0.2% to 7.9%, according to its figures. The report suggested that buyers were becoming wary about prospective interest rate rises and any change in government as a result of next year's general election.
New rules to be introduced from next year will extend the scope of capital gains tax (CGT) to gains made on the disposal of UK residential property by non-residents. The change is aimed at improving the "fairness" of the UK tax system and to "address the current imbalance between the treatment of UK and non-UK residents disposing of UK residential property". It would also bring the UK into line with many other countries, which already charge CGT based on the location of the residential property rather than the location of the seller.
A formal response to a consultation on the UK government's proposals will be published in autumn. However, the government has already confirmed that it will introduce a form of 'close company' test to limit the scope of the extension so that it would not apply where a disposal of UK property is made by a diversely-held institutional investor that holds UK residential property directly, or by one which invests indirectly through an arrangement that is not controlled by a few private investors.