UK Budget 2020: SevenCapital Reacts to 2% Stamp Duty Surcharge For Non-UK Residents
Responding to Chancellor of the Exchequer Rishi Sunak’s UK Budget announcement of a reduced 2% stamp duty surcharge on properties purchased by non UK residents, coming into effect from April 2021, SevenCapital director Andy Foote commented:
“The introduction of a reduced 2% surcharge will of course be a welcome move should it be effective in raising the Government’s target £650 million funding to help rough sleepers across the UK. It will also prompt a level of relief for non-UK resident property investors against what was initially speculated to be a 3% surcharge that might have been implemented within the next few months.
“Where these investors are concerned, whether they be overseas nationals or British expats wishing to keep their wealth within the UK, this move is likely to be met with relief and extended opportunity. The allowance of a further 13 months until the levy is implemented will be welcomes by those wanting to get into the market ahead of time, as will the slightly reduced levy amount for those who were expecting the higher figure.
“For the UK’s residential property market this may of course mean a slight shift over the coming 12 to 24 months. Ahead of the April 2021 date we are likely to see a heightened interest or sense of urgency, particularly in the UK’s prime residential markets, as investors seek to secure their investment ahead of time and avoid paying the extra stamp duty.
“Post April 2021 is where the market may need to prepare itself for a potential adjustment in buyer activity. What is a likely outcome from investors at the lower end of the UK’s prime markets is a step change in how they invest; buyers who typically choose London’s prime residential markets, particularly those buying at the lower end, may reconsider their strategy to purchase higher volumes of lower priced properties, at a lower stamp duty band in order to maintain the level of tax they are currently accustomed to. We may also see investors choosing other investment vehicles including incorporation as a sustainable property investment operation.
“Additionally, the UK’s regional cities and areas outside London could see heightened interest from overseas buyers post April 2021 as they look to prime or high growth markets in alternative, better value locations than the capital, to avoid the need to for extra expenditure on tax.
“Should this happen, of course this will then prove to further boost house prices in these regions.
“We have already begun to see a shift in the market over recent years with both domestic and international buyers choosing to buy outside London, and this surcharge is likely to act as a further catalyst, particularly where overseas buyers are concerned.
“If the UK is looking to re-balance the property market then this may go some way in helping this along.
“What won’t change however is the fact that the UK remains widely recognised as one of the most stable and strongest markets in the world in which to invest in property. Ultimately, for those who invest in property for the long-term, an adjustment in stamp duty in the short term is unlikely to water down the long term benefits of investing in the UK.”