UK to impose stamp duty surcharge on non-resident property buyers
May told the Conservative Party conference last weekend (Saturday 29September) that the money raised by the new tax will be used to address homelessness. She said that it 'cannot be right' that non-residents and foreign companies can buy properties as easily as British residents, although most foreign investors will already pay the existing 3 per cent additional SDLT rate for buyers of second homes.
According to May, evidence shows that non-resident buyers push up house prices and lower home ownership in the UK, although she did not claim a link between foreign buyers and homelessness. Research cited by the party suggests that 13 per cent of new London homes were bought by non-UK residents between 2014 and 2016, and that an increase of one percentage point in the volume of homes being sold to overseas companies put up house prices by 2.1 per cent. However, the English property market has softened considerably since that research was done.
Phil Munro TEP, of law firm Withers, also noted that stamp duty rates have risen significantly in the UK over recent years, especially on high-end property. A rate of 12 per cent now applies (before the 3 per cent additional rate for second homes) on the consideration component of a purchase over GBP1.5 million in England and Wales.
'Further, an extension of inheritance tax and capital gains tax to non-UK residents over recent years makes the UK significantly less attractive from a tax perspective for overseas investors', he said, suggesting that the new proposal will present immediate difficulties to the current legal requirement not to discriminate between EU nationals.
A consultation is being prepared on the proposal. It is not known when the new levy might be introduced.
Several Australian states have also introduced extra levies on foreign property buyers in recent years, with the rationale usually given as preventing property bubbles.
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