Tory air tax plan could hit overseas market

David Cameron\'s proposals to charge a higher rate of aviation tax to consumers who take more than one short-haul flight a year will have a damaging effect on the overseas property market, says Rightmove Overseas.

The proposal was outlined last week by the Conservative Party leader in an environmental policy showdown with chancellor Gordon Brown, the probable next Prime Minister.

It was reported in the national press last week that more than 400,000 voters have second homes abroad and make an average of three visits each year to their properties, meaning they would be hit hard by Cameron’s tax.

Justin Figgins, head of Rightmove Overseas, says: “One of the drivers for the growth of the overseas property industry has been the availability of low-cost flights.

“In fact, many investors speculate where the airlines will fly to next and the arrival of low-cost carriers has transformed rural and coastal areas in many parts of Europe.”

He says that making access to second homes more expensive will have a negative effect on the market by putting off many potential buyers.

But he adds: “Lower costs of living, potential for capital growth, access to leisure facilities and better climate will always make overseas property a must- have for many, regardless of how expensive or guilty the government makes us feel about getting there.”

Simon Conn, managing director of Conti Financial Services, says: “I don’t think it will deter people from buying property abroad. When you look at the other costs involved in purchasing such as Stamp Duty and legal costs, which can add up to as much as 10% of the purchase price, an increase in aviation tax would be negligible.

“But we have always said that you should not base your choice of property abroad on the availability of cheap flights, as low-cost airlines might decide to pull flights or drop routes at any time.”