UK Property Taxes Top Developed World Table

By : Nick Marr

New taxation figures from the Organisation of Economic Development and Co-operation, (OECD) have confirmed something plenty of property investors already suspected – the UK’s property tax burden is the highest in the developed world.

The most recent update of the OECD’s taxation stats, show that property taxes in the UK account for 12.5% of all taxes imposed on Britons. Although its represents a small drop from the 12.7% it rose to in 2014, with the 2015 level being more than twice the average of the OECD as a whole, it remains the highest proportion of taxes, in the world.

“These figures may come as a surprise to many, but they don’t to property owners and investors in the UK,” said Fulham based estate agent Lawsons & Daughters. “Property is a passion in Britain, and that’s reflected in the average rates of activity and investment, which means buyers are subject to numerous related tax payments on a fairly regular basis.”

In particular, for property investors the tax regime can sometimes seem considerable. The figures do show, though that the property tax burden, fell a little in 2015 from 2014. That’s unlikely to be repeated in 2016, however, as Stamp Duty Taxes for owners of more than one property rose and further property-related taxes are set to increase in 2017, too.

While the 2008 credit crunch can’t be blamed for everything, it has certainly played a part in the UK’s property tax system. Since then, the UK Government – along with numerous others – has sought to increase its tax take to make up for the costs associated with that period. Under a Conservative Government, this has resulted in BTL property investors bearing much of the brunt of that need to collect more taxes.

“The OECD tax data firmly support the fact that 2008 led to Governments around the world claiming more tax payments,” said Battersea estate agent, Eden Harper.

Indeed, the OECD figures show a noticeable increase in the UK’s property tax burden from 11.6% in 2008 to 12.2% in 2009. In the years that followed there were some small falls and rises until 2013 when there was a jump from to 12.4% from 11.9% in 2012.

This wasn’t just the case in the UK, but elsewhere too. At least regarding the 2008/09 change. For US tax payers, property taxes surged to a proportion of 14.1% of all taxes in 2009 from 12% in 2008. That increase has since been more than reversed, as the property-related tax burden was 10.4% in 2015.

Unsurprisingly, Greece is also on that 2008-09 property tax increase list. The property tax burden rose to 6.5% in 2009 from 2008’s 5.6%, and has fluctuated since to reach 5.3% in 2015. Other countries where the proportion of property taxes followed a similar pattern include: Canada, Italy, France, New Zealand and Japan.

In Germany, the same has not happened with the property tax burden remaining unchanged at 2.3% in 2008 and 2009. Although, in 2015 it did edge higher to 2.9%.

“Although the UK isn’t the only developed country to have a tough few years, it is now pretty much the only one where property-related taxes are still on the high side, and expected to rise further in the next two years,” said Denhan Guaranteed Rent. “Hopefully 2017 will mark a halt to these property-related tax increases.”