Will increasing taxes for foreign buyers fix the UK housing crisis?

As we edge closer to the 2024 general election, the political parties are beginning to lay their cards on the table, with the Tories deliberating scrapping inheritance tax whilst Labour propose to "take on our antiquated planning system". 

My colleague, Sarah Wray, recently considered what personal taxation might look like under a Labour government (you can read that article here).

At the Labour Party Conference yesterday, calling itself the "party of home ownership", if elected they confirmed plans to build more homes and increase UK home ownership to 70%, with funds being generated through an increase in Stamp Duty Land Tax (SDLT) for overseas buyers.

Currently, overseas buyers pay a 2% surcharge in addition to the normal and higher rates of SDLT (up to a maximum of 17%). The proposals would increase the level of surcharge payable although we do not currently know how much by. 

Other previously discussed proposals included making new developments initially available for first-time buyers only, or preventing more than 50% of homes in any one development being owned by non-UK residents, although these were not mentioned yesterday.

In her speech, Shadow Chancellor Rachel Reeves said "rocketing interest rates have dealt a hammer blow to the dream of millions of people who want to own their own home, when already that dream was far too remote for far too many people. It is not right that, while so many people are struggling, many homes are bought by overseas buyers, who may own a property but leave it vacant. Driving up prices, while families and young people are desperate to get onto the housing ladder." 

Whilst few disagree that the housing crisis needs to be urgently addressed, there remains a concern that such measures could make the UK property market less attractive to foreign investors, especially alongside increasing transparency measures which limit opportunities for concealment behind a company or trust.

That being said, similar concerns were raised prior to the introduction of the 2% SDLT surcharge in April 2021 and yet interest from overseas investors has remained strong, with the ultra-wealthy ultimately able to withstand tax increases.