In the second part of our interview with Grainne Gilmore, Head of Residential Research UK at Knight Frank, we ask whether the Abbott government’s plan to impose higher fees on foreigners buying residential property will mean they stop buying Australian real estate.

With a globally mobile population of high net worth individuals and increasing globalization of investments, the rules around foreigners buying property will become a rising theme for the global real estate market, says Gilmore.

“Governments should be allowed to change their property taxes but its more a case of how you do it,” says Gilmore. “In the UK, there is a proposal to introduce a mansion tax which is an annual charge on your home over $2 million pounds. It’s not just a tax on overseas buyers, it’s a tax on everyone and it’s really seen as a tax on London. Everyone’s kind of got carried away with this idea that overseas buyers have pushed up the London market, in fact they’re very active in the center of London and the rest of it is just Londoners and there’s not enough supply.”

The UK has also introduced capital gains tax on overseas buyers who will pay capital gains tax on selling properties from April, and they have ramped up stamp duty on everyone. “They have introduced an annual tax on envelope dwellings—if you buy a property through a company, you pay 15% stamp duty to buy it and then an annual charge. They have made four times as much money as they expected from that, because people have just paid it. It’s seen as a cost of buying a house in London if you want to buy it through a company.”

Gilmore says people have absorbed these changes. “You can maybe call it a crackdown, but it’s more a case of, ‘Will it be absorbed?’ What we’ve found is as long as there’s not a lot of discussion about it, you just get on and do it, people can factor it into their decisions and absorb it,” she says.

“It just depends how the [Australian] market is going to respond to it. It just depends how it is presented,” says Gilmore. “Will it be absorbed? As long as there’s not a lot of discussion about it, as long as you do it, people seem to take it as another cost of doing business.”

In terms of Australia, Gilmore said the idea of actually not being able to sell a property into the whole global market and having to sell it onto the national market could be a “sticking point” for some buyers. “The market could probably absorb these changes, overseas buyers will probably absorb these changes. It’s more a case of making them quick, implementing it and then leaving it alone,” she says.

“The problem we’ve had in London is that policy makers have fiddled relentlessly for five years and now it’s starting to take its toll. I think in terms of tax changes, if you’re an ultra wealthy individual you will look at the tax change, you won’t be too worried about the conversation happening around the tax change.

“Property is an emotive subject and that’s what we’ve seen around the world. It’s risen up the agenda and in the UK, we’re coming up to an election and a lot of the parties have named it as one of the key factors—we’ve never seen that before. It’s high up on everyone’s agenda around the world.

“Don’t underestimate the power of being able to touch your investment,” she adds. “People really like it.”