Taylor Wimpey Share News (TW.)

(Sharecast News) - Shares in house-building companies were subsiding on Monday after the Prime Minister announced a new tax on residential property purchases by overseas buyers.Theresa May said it was the government's intention to charge foreign people and businesses between 1% and 3% of additional tax or stamp duty on house purchases to stop them driving up house prices.The Treasury expects the move to raise up to £120m a year, with the proceeds said to be used to deal with rough sleeping.It is estimated that 13% of new-build London properties are bought by non-UK residents, driving up prices and making it harder for first-time buyers to get a foot on the housing ladder. "The housing market looks set to take another hit, with new taxes on foreign ownership expected to dent investment at the very time that the UK market looks least attractive," said Joshua Mahony, market analyst at IG."With the prospect of even fewer prospective buyers for homes in the UK, it comes as no surprise that we are seeing the housebuilders losing ground in early trade today."Shares in Berkeley Group, one of the most focused of the big housebuilders on London and the South-East, were down 2% on Monday morning, with Persimmon and Taylor Wimpey among the big losers on the FTSE 100.Shore Capital housing sector analyst Robin Hardy said it was an "ill-judged decision" seemingly built on the idea that overseas investors buy homes and leave them empty.He pointed to "very strong anecdotal evidence that investors rent out their investments, thereby contributing positively to the UK housing market".Hardy said it was not assured that there will be a negative impact on demand as the government's latest surcharging of property tax, with an additional 3% added to multiple ownership and an additional surcharge for overseas buyers, did not reduce demand."If the purchase is channelled through a UK domiciled entity, it is likely that the tax will be avoided. Overseas investment is a vital part of the London housing market and making this move does risk damaging all development both open market and, very importantly, the rapidly growing build-to-rent market," the analyst said.