U.K. residents have 12 weeks starting Monday to offer their thoughts on the government's plan to introduce an additional 1% stamp duty tax for non-U.K. resident home buyers, according to the government’s website
The levy, on non-resident buyers in England and Northern Ireland, is being considered as a method to help control house price increases.
More:Pebble Beach, California, House That’ll Appeal To Golf Lovers, Asks $35M
"The U.K. is and will remain an open and dynamic economy, but some evidence shows that non-U.K. resident buyers of U.K. property could be inflating house prices," said Mel Stride, financial secretary to the treasury and paymaster general, in a news release.
The 1% will be on top of existing stamp duty rates, which are paid on increasing portions of a residential property price above £125,000 (US$162,662), up to 12%.
Since 2016, an extra 3% stamp duty has also been paid by any buyers purchasing a second home or buy-to-let property.
"A 1% surcharge could help more people own their own homes in the future, and its proceeds will go towards tackling rough sleeping [or homelessness], boosting our plan to halve the numbers of rough sleepers by 2022," Mr. Stride said.
In the consultation paper, published online, the government is proposing to treat individuals as non-U.K. residents for the purposes of the surcharge if they spend fewer than 183 days in the country during the year prior to the date of the transaction.
However, they will be eligible for a full refund of the levy if they go on to spend 183 days or more in the U.K. in the 12 months after the transaction, the government has proposed.
From Penta:Burgundy Powers Fine Wine Sales
The stamp duty fee will also apply to non-U.K. companies buying residential property in England and Northern Ireland, according to the consultation papers.
In the U.K., a consultation period is held to gather opinions from the public, representatives of organizations and companies about departmental policies and proposals.
This period will run until May 6, after which the government will evaluate the responses.
The surcharge will be introduced in a future Finance Bill.
The proposed tax could have a detrimental effect on the capital, and will "pour more glue into what is already a very fragile London market," said Camilla Dell, managing partner at Black Brick, in a previous statement about the proposed levy.
"You don’t solve Britain’s housing crisis by taxing and taxing again foreign buyers," Ms. Dell said in the October statement, after the tax was first proposed by Prime Minister Theresa May. "Has the government forgotten that foreigners already pay a 3% surcharge when buying here? This has already had a detrimental effect on London—lowering transaction volumes, creating an illiquid and dysfunctional property market."
Increasing taxes on, and creating hurdles for, foreign ownership is a recent trend, Vancouver, Canada, imposed an extra 15% tax on foreign buyers in 2016 and New Zealand banned them all together from buying existing homes earlier this year, in an effort to cool rising property prices.