Increasing numbers of reports suggest that the government will use next week’s Budget to confirm a three per cent stamp duty surcharge on the purchase of homes by non-UK tax residents.
The new surcharge – strongly hinted at by the government for many months – would be on top of existing stamp duty on a property, and on top of the current three per cent additional homes surcharge.
The Financial Times, citing well-placed sources in The Treasury, suggest this measure will be finally confirmed by new Chancellor Rishi Sunak in his first Budget on March 11.
Leading PropTech entrepreneur Neil Cobbold, who is chief sales officer at automated payment platform PayProp, says this new stamp duty will be welcomed by domestic investors who may see competition from their overseas counterparts diminish over the coming months.
“It’s likely to have the biggest effect in the capital, where the government estimates that one in eight new London homes were bought by non-UK residents between 2014 and 2016. The surcharge was previously mooted at one per cent but its increase to three per cent will certainly act as a deterrent” he says.
But Cobbold warns: “Tenants in large English cities could suffer in the long-term if the additional tax burden leads to a fall in overseas investors and subsequently the number of rental properties available” says Cobbold.”
He adds that while there has in the recent past been much speculation surrounding wider stamp duty changes, the government appears to have put those on ice.
“Stamp duty is a hot button for consumers and property professionals, so the calls to reform the system are always plentiful in the lead up to a Budget. Boris Johnson has previously said that stamp duty rates are ‘absurdly high’ so there could be changes later in his tenure.”
“In the meantime, property professionals and consumer groups will continue to lobby politicians to reduce the pressure. Reconsidering the three per cent surcharge on additional homes and the tax rates which affect the very top end of the market would be a good first step” he explains.
Richard Donnell, director of research and insight at Zoopla, also wantsa to see SDLT reform in next week’s Budget.
“It’s time for the Chancellor to turn his attention to the core housing market and review the price bands and five per cent stamp duty rate that covers averaged priced homes across large parts of London and the commuter belt. No government wants to cut taxes indiscriminately, particularly when losses could be high. However, any cut to the rate of stamp duty could stimulate much-needed marketed activity in southern England in particular” says Donnell.