Super-Rich Raises House Prices

An international elite is pricing British citizens out of the housing market with the help of government tax breaks for foreigners living in the country, figures reveal.

More than half of London’s multimillion-pound houses are now bought by “nondoms” (nondomiciles) who, unlike most British citizens, are able to use offshore trusts to pay far less stamp duty.

Economists say that the new boom in house prices in the capital fuelled by foreign money is rippling down the market, making it harder for first-time buyers to get on the property ladder.

Gordon Brown will come under pressure today to justify the rules, which critics claim create a double standard. The Government exempts nondoms from tax on their international earnings, even though in most cases their home countries do not tax them either.

The acquisition of a London home will be organised to minimise tax. Mr NonDom buys shares in the offshore company that holds the property. In this way, he pays stamp duty at the lower rate of 0.5 per cent, the rate payable on share purchases, rather than at 4 per cent, the rate on properties of more than £500,000. This reduces the tax bill on a £10 million home from £400,000 to £50,000.