Decaying London Mansions Prompt Punitive Tax Calls

By Editorial 06 February, 2014

Mayor of London Boris Johnson has said that he would "welcome" a 150 percent council tax surcharge on homes that remain empty and unused for long periods, in the wake of a media report showing that some properties bought for investment purposes in London's most expensive street are dilapidated.

The state of unoccupied properties owned by foreign investors on The Bishops Avenue in northwest London was revealed by the Guardian newspaper last week. Photos showed collapsed ceilings, walls destroyed by damp, and vegetation growing on rotting stairways.

Johnson recently raised the issue of empty houses owned by the super-wealthy during last month's Mansion House London Government Dinner. He said that foreign buyers should either live in or rent out their London properties, which should not be seen as "blocks of bullion in the sky." However, he also warned the Government not to "slam the door" on foreign buyers, after Chancellor George Osborne announced plans to impose capital gains tax on the sale of homes by non-UK residents from 2015. The move has been dubbed an "oligarch tax."

Since April, councils have had the power to impose an empty homes premium of up to 50 percent on properties that have been unoccupied and unfurnished for 2 years or more. Responding to the report, Communities Minister Stephen Williams said that this premium, along with other measures introduced since 2010, had brought 40,000 properties back into use.

The Labour opposition, meanwhile, has called for even tougher sanctions, with Clive Betts MP suggesting that councils should be able to treble rates for unoccupied properties. The architect Richard Rogers, who has advised Boris Johnson, has suggested a "severe" new tax for properties that are empty for more than six months.

However, the suggestions have been dismissed by Trevor Abrahmsohn, whose estate agency Glentree International focuses on prime properties in northeast London, including The Bishops Avenue. Abrahmsohn accused councillors of politicizing town planning, and argued that as the UK is a free country owners should have the right to keep their properties vacant if they so wish.

Tags: Capital Gains Tax (CGT) | Tax | Property Tax | United Kingdom | Tax Rates | Expats | Investment | Property Investment | Invest | Investment |


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