* Tax to apply to non-residents after April 2015
* Finance minister seeks to slow London property rises
* London prices soaring, forcing locals out of the market
By Brenda Goh
LONDON, Dec 5 (Reuters) - Britain will impose a capital gains tax on foreign property investors from 2015 in a bid to allay fears that wealthy foreign buyers are inflating a London-led property bubble which is pricing locals out of the market.
The acquisition of housing ranging from opulent mansions to modest apartments by purchasers including Russian oligarchs, Indian tycoons and Europeans fleeing the euro zone crisis has helped fuel a London-led rise in prices. That has stoked concerns ahead of the 2015 election that many Britons may never be able to afford their own homes.
To roars of approval in the British parliament, finance minister George Osborne said that from April 2015 he would introduce a capital gains tax on future gains made by non-residents who sell a residential property in the United Kingdom.
“Britain is an open country that welcomes investment from all over the world, including investment in our residential property,” Osborne said in a budget update.
“But it’s not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence - while those who don’t live here do not. That is unfair.”
Britons typically pay capital gains tax at 28 percent on any profit from selling property that is not considered their primary residence.
Property prices in London, which has a residential housing stock worth more than $1.8 trillion, have jumped by about 10 percent in the last 12 months and increases in some parts of the capital have been greater.
In November house prices rose at their fastest pace in three years and mortgage approvals have hit a nearly six-year high.
Bank of England chief Mark Carney last month unexpectedly put the brakes on a programme to give banks cheap credit for mortgage lending.
Foreign investors have bought about 70 percent of newly built properties across central London, according to Savills , while 30 percent of luxury London homes worth 1 million pounds ($1.63 million) or more were bought by non-UK residents in the year to June, Knight Frank said.
Developers that have benefitted or are looking to cash in on the trend include Berkeley and Barratt Developments , who have built thousands of homes in London, as well as British Land and Land Securities, which have recently entered the luxury housing market.
Property lawyers and estate agents said foreign owners would be relieved the tax will not apply to historic gains before 2015. But they cautioned that the overall impact could be marginal as many foreign investors see London property as a safe and profitable place to park capital.
“Tax is not the primary driver for the majority of international buyers of residential property in London,” Knight Frank’s head of global research, Liam Bailey, said.
“It is important to note that the change to CGT rules brings the UK in line with other key investor markets, such as New York and Paris, where equivalent taxes can approach 35-50 percent depending on the owner’s residency status.”
It was not immediately clear how the tax would be collected and how it would apply if foreign owners used a domestic company to purchase property.
Damien Bloom, a partner at law firm Berwin Leighton Paisner, said the government would probably place the responsibility for collecting the tax with the transaction’s solicitors, a practice already seen in France and Ireland.
Britain last year introduced stamp duty of up to 15 percent for purchases of more than 2 million pounds through a company, a move which some agents have blamed for stalling the 10 million pound-plus market in London.