Government to charge overseas buyers 2% stamp duty surcharge – reaction
The government will introduce a 2% stamp duty surcharge for non-UK buyers from April 2021, the Chancellor confirmed in yesterday’s Budget.
While a number of property professionals are disappointed with this change, it’s expected to fuel stronger activity before it comes into force in April next year.
Fraser Slater, chief executive of real estate consultant Ludgrove Property, was among the most critical of the move.
He said: “Johnson, Raab and Javid all pointed to a stamp duty cut in their leadership campaigns but sadly political point scoring was more important.
“No doubt there will be an uptick in purchases by overseas buyers ahead of the introduction of the tax in April 2021.
“Thereafter unless the underlying rates are changed, global talent will be looking elsewhere for a home. ”
Jason Rishover, chief executive of developer Heronslea Group, said: “We were disappointed that, yet again, stamp duty was not addressed, other than the new surcharge of 2% for non-residents, as it remains a thorn in the housing market’s side and needs a complete overhaul.”
Janet Armstrong-Fox, partner and head of private client property at law firm Collyer Bristow LLP, said: “Any overseas buyer will almost certainly already be paying the extra 3% SDLT that the purchase of any second home attracts, so the additional 2% as an overseas buyer will be a further disincentive to invest here.
“After a short-term flurry of activity before April 2021, the 2% overseas buyer surcharge will have a detrimental effect on the London property market in particular with the knock-on effect of deterring overseas interest in the UK at a time when the UK needs to be seen as very much open to the world for investment and trade.”
Not everyone was negative about this change however.
Greg O’Reilly, vice president – senior analyst at Moody’s, said: “The 2% stamp duty surcharge on overseas borrowers, to be applied from next year, is credit positive in the long term for UK buy-to-let RMBS because it will reduce the supply of new properties in big city areas that are typically used for buy-to-let, thereby supporting rents.
“Foreign buyers make up a disproportionate contribution to new-builds, and tend to concentrate purchases on flats in city centres. Supply of new builds will decline because funds from overseas investors will fall.”
Some think investors will be able to swallow this extra cost.
Patrick Alvardo, director of Knightsbridge estate agency Nicolas Van Patrick, said: “Many foreign buyers purchasing in other currencies will be able to absorb this extra 2% within the foreign exchange currency trade and still benefit from the downward correction in prices since the peak back in 2014.
“We still feel that London property compared to other global cities looks fair value and those buyers wanting to proceed can still do so before the 2% surcharge comes into effect in April 2021.”