Controversial housing tax has proved successful

Analysis

Taxes on foreign property purchases have been trialled in big cities around the world, and are an idea that is gaining pace as concerns grow about the globalisation of capital and the rising cost of housing.

Where they have been tested over the past few years, taxes have been successful – but controversial.

Measures have been imposed in Australia, Hong Kong, Singapore and Canada. Tax rates on foreign property buyers have ranged from 4 per cent to 15 per cent. The impact in Vancouver has been dramatic, with the proportion of overseas buyers dropping from 13 per cent to 4 per cent, and property prices falling by 9 per cent.

But the measure has been denounced as populist and xenophobic, with Asians in Australiaandcanadacomplaining they are being scapegoated for a lack of affordable housing.

The measure could have an impact in the Highlands, where land reform campaigners have raised concerns over foreignowned estates, and in Edinburgh, where debate is growing over the number of short-term lets in the city’s New Town.