UK overseas property buyers face tax hike

The UK Government has implemented a 2 per cent stamp duty hike for overseas buyers of British properties.

In last week’s Budget speech, Chancellor Rishi Sunak announced that the surcharge of 2 per cent of the purchase price of a property for buyers from overseas will take effect next year.

Sunak said the measure will go towards funding up to 6,000 new places for people to be able to live and ‘end rough sleeping in this parliament’.

The government added the measures will also help to control house price inflation and support UK residents to get on and move up the housing ladder.

“The housing challenge is most acutely felt by those with no home at all, so today I am confirming £650 million of funding to help rough sleepers into permanent accommodation,” the Chancellor explained.

“That will buy up to 6,000 new places for people to live and prove a step change in support services to end rough sleeping in our parliament.

“To fund those measures, I am confirming today that our manifesto promise to introduce a new stamp duty surcharge for non-UK residents will be introduced at a rate of 2 per cent from April 2021.”

The announcement has been warmly welcomed by many property industry experts.

“The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets, said Tom Bill of Knight Frank. “Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments.”

Meanwhile, Penny Mosgrove, CEO, Quintessentially Estates, commented: It’s business as usual. I was pleased to see the Chancellor’s tone reflected what we’re seeing in our industry.’’

Some experts, though, were slightly concerned that the timing of the announcement could deter foreign investment at a time when it will be most needed.

“Slapping a stamp duty surcharge on overseas property buyers sends an unhelpful signal at a time when open arms are needed to encourage inward foreign investment,’’ warned Charlie Smith, MD of London Real Estate Advisor.

Article published 16th March 2020