The head of a leading Chinese property portal has taken the unusual step of commenting on a British tax policy - the new stamp duty surcharge announced by Prime Minister Theresa May last weekend.
“It's wrong on the facts and destructive to the property markets. We expected legislation to more effectively detect and prevent prohibited investments by corrupt businesspersons from countries like Russia, but not something as broad and harmful as a foreign buyer tax” says Carrie Law, chief executive and director of Juwai in a statement sent to Estate Agent Today.
Juwai, set up in 2011, has been described by finance analysts at Bloomberg as China’s largest overseas property website, and has a high hit rate from Chinese nationals wanting to invest or buy across the world.
Law does not hold back in her critique of the stamp duty surcharge, saying: “The Prime Minister is unfairly targeting overseas buyers, but that’s just the zeitgeist in the UK at the moment. Like in Australia and New Zealand, the foreign buyers tax isn’t supported by facts or data, but it does reflect the emotional state of many Conservative voters in the UK.”
She continues: “I’ve been told by political analysts that this announcement was probably a way for the Prime Minister to regain lost credibility with hardcore Brexiteers and to gain leverage in intra-party disputes. They told me it’s not really driven by actual concern about foreign buyers.”
May revealed on Sunday - at the opening of the Conservative party conference - that the new duty would apply to buyers who are non-resident and/or non-taxpaying in the UK. The duty would be between one and three per cent with the precise amount, and the timing of its introduction, to be decided following a formal consultation.
May suggested that proceeds from the surcharge would go towards easing the growing problem of homelessness in the UK.
However, the Juwai chief executive says the policy risks backfiring on the UK.
“When you look at the bare facts, foreign buyers are a boon for the UK. They put money into the pockets of locals, they enable the construction of new housing that locals can rent or buy, and they support jobs.
“Buyers from China are more than willing to pay their fair share. They have shown in other markets that a tax of one per cent to three per cent is something they can live with, especially when it’s linked to such a worthy cause. They can understand that the UK needs to regulate its markets. We encourage the government to either drop the plan or flesh out its details before Christmas.
“Buyers from mainland China in particular are much more willing to buy flats that aren’t yet built than are locals in the UK. That gives developers the pre-sales they need to start construction. Without having pre-sold a certain percentage of the building, they cannot get financing to start paying builders to lay bricks. That's one reason research in Australia shows that foreign buyers enable the construction of four residences for every single one that they purchase.”
Law claims that the surcharge comes at a difficult time for the UK.
“The UK’s economic future is dangling at the end of a thread due to the poor results so far of the Brexit negotiations. It seems a poor moment to create further problems for homeowners and first-time buyers by shutting down new construction and depressing prices” she concludes.