Chancellor George Osborne Eyes Capital Gains Tax for Foreign Property Investors

Chancellor George Osborne is aiming to prevent a housing bubble from forming by eyeing up whether to impose a capital gains tax on foreign property investors.

After pledging to raise CGT three years ago, media reports saying that Osborne was set to impose a new rate for foreign property investors, will not come as too much of a shock.

People living in Britain pay 18% CGT and 28% if they make a profit when reselling a property that isn't classified as their main home.

People who own properties in the UK but are deemed non-residents are currently exempt from CGT.

The UK Treasury declined to comment on media reports.

Housing Bubble?

Home prices in the UK rose 5.8% on year in October, the fastest pace in more than three years, as the government's Help to Buy Scheme attracted more buyers into the property market amid supply constraints.

Mortgage lender Nationwide said the average home price in the UK is £173,678 ($278,741, €202,739) in October, up 1% from September and 5.8% from October 2012. Market analysts expected monthly and yearly growth of 0.7% and 5.1%, respectively.

"The UK housing market appears to be following the more resilient upward trend evident in the wider economy in recent quarters," Nationwide's chief economist Robert Gardner said in a statement.

Nevertheless, house prices still remain around 7% below their 2007 peak, according to Nationwide.

Critics of the government's efforts, particularly of the guarantee for banks' mortgage lending under Help to Buy which launched in October, say there is a threat of a housing bubble because supply is falling so short of demand.

Others argue that there is a lot of slack in house prices across most UK regions because they are so far below their 2008 peaks.