UK risks overseas investment through high property tax

The UK ranks outside the top 10 for property tax, and risks reducing its attractiveness to overseas investors by charging higher purchase taxes than its main competitors, a study has found.

In total, 26 countries were surveyed, including all members of the G7, for the rate of tax they charge on properties over $1 million.

The UK comes in at number 11, charging on average 3.5 per cent, or £27,000, in tax on a property purchased for $1 million.

New Zealand and Russia ranked highly, effectively charging 0 per cent on prime property purchases, while European partners Denmark and the Netherlands both charge less than the UK, at £16,025 and £15,262 respectively.

While the European average is 3.8 per cent, Belgium had the highest property tax for real estate, charging a staggering 11.3 per cent, or £86,330 per $1 million spent.

By comparison, the US charges just 0.6 per cent on average, and Canada 1.8 per cent.

Experts suggest that countries with higher property tax, despite bolstering public finances, risk missing out on valuable foreign investment.

In 2015, a report found that the UK had attracted record levels of foreign investment, and £10.6 trillion of UK assets were owned by overseas investors.