The 2019 Conservative manifesto stated it would ‘end the blight of rough sleeping’ and ‘commit to renewing the Affordable Housing Programme’. How? By reintroducing a 3% stamp duty surcharge on non-UK resident buyers.
The Conservatives have cited a 2017 York University study which showed that 13% of new London homes were bought by non-residents in 2014-16 with the affect being an overall increase in property values.
Closer to home, In a BBC article published in March 2019 it advised that Manchester was also seeing an influx of foreign investment within the city:
“nearly two thirds of flats have been snapped up by international buyers.”
The idea of implementing a surcharge against foreign investors is not new; surcharges are already in place in other countries such as the Canada, Denmark and New Zealand with the city of Vancouver having a 20% surcharge on properties purchased by foreign investors.
Should the Conservatives’ plans come to fruition it could leave some international buyers paying as much as 18 per cent in stamp duty as the top rate is 12 per cent charged on the portion of the purchase price above £1.5 million however where buyers already own a property elsewhere an additional 3% surcharge is added to ‘second homes’ or buy-to-let properties.
According to Zoopla the average price for a property on Deansgate, Manchester is £275,546.00 as of July 2020. Using the Conservatives’ proposed surcharge a foreign investor who already owned properties elsewhere would pay £20,310.06 in SDLT. Currently the same investor would face a tax bill of £12,043.00.
With the current COVID-19 pandemic and Brexit taking up most, if not all, parliamentary time at this current moment the likelihood of the surcharge being introduced in the near future is slim however with the idea of implementing such a surcharge crossing the political divide it is a matter of ‘when’ rather than ’if’ the surcharge is implemented.
For advice on the buying and selling of residential and commercial property in the UK, contact Farleys Solicitors on 0845 287 0939 or send your enquiry by email.
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