The UK’s property market has long attracted property investors from around the world, and for the most part, this has been a benefit to people in the UK.
In addition to funding new-build developments of both residential and commercial property, international property investors have helped to expand the supply of buy-to-let properties, which, of course, is good news for the UK’s many renters.
Now, however, UK-based property investors fear that the prospect of Brexit could drive away international property investors and thus exacerbate the issues in the UK’s property market.
Brexit is essentially an exercise in unscrambling eggs – and could get expensive
As Leavers frequently point out, the EU, in its current form, has been around for less than 30 years.
The UK, in its modern form, has been around since the partition of Ireland in 1921 and there were various forms of union between its constituent members for literally hundreds of years before that.
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As Remainers frequently point out, however, over the course of the last 30 years, the UK has become deeply integrated into the EU, to the point where Brexit is, essentially, an exercise in unscrambling eggs. In the short term at least, this process could be both very confusing and very expensive, particularly if Brexit leads to a weak pound.
There is a limit to how much money the UK government can save by cutting back on expenses and there is also a limit on the funds held in the Chancellor’s famous “Brexit war chest”, which means that the government is probably going to have to do everything it can to increase its income and, as everyone knows, that means more taxes.
The only question is how these taxes (for which read on whom) will be applied.
Taxes can impact a lot of people in a small way or a few people in a big way
If the UK can continue to attract international investment of all sorts, it can continue to grow its economy and thus have a decent fighting chance of raising the funds it needs through “acceptable” taxes, such as income tax at moderate levels.
This is, presumably, what it will be hoping. If it doesn’t, however, it may have to resort to making blatant “cash grabs” (essentially as the Cypriot government did in 2013).
The problem for the UK government would be that making such raids on the UK population as a whole would be politically-sensitive to put it mildly.
Small groups of wealthy individuals would be much easier targets and people who have assets in the UK but do not necessarily live in the country would arguably be the easiest targets of all. Especially if the taxes could be presented in a way which suggests that they are intended to protect the UK population, like, for example, the plans for a further stamp duty levy on overseas buyers.
This approach might plug a short-term gap in funds, but it is not the way to attract investors to the UK, let alone to keep them there and have them continuing to provide the funds the UK needs to continue improving its infrastructure in general and its housing in particular.