Chancellor Rishi Sunak has announced plans to introduce a 2 per cent surcharge on residential property purchased by non-UK residents in his 2020 budget.
The tax is designed to help control house price inflation and support domestic residents “to get onto and move up the housing ladder”. The stamp duty will take effect from April 2021, with the money raised put towards funding accommodation and support services for rough sleepers, the chancellor said.
Any impact of the surcharge will be most keenly felt by residential developers in London, which receives the lion’s share of overseas investment in new homes, with the devaluation of sterling adding to the capital’s attractiveness.
During the first 10 months of 2019, overseas-based investors accounted for 18 per cent of London’s rental properties, up from 10 per cent the prior year and representing the largest rise for any UK region, according to research by estate agency Hamptons International.
For high-end housebuilder Berkeley (BKG), whose sales are split broadly evenly between owner occupiers and investors, overseas investors have buoyed sales in recent years.
However, the introduction of a surcharge for overseas buyers would bring the UK into line with many other global property markets, said Knight Frank head of London residential research, Tom Bill, said. “Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments.”
The chancellor also stopped short of announcing wider reform of stamp duty rates, which many homeowners argue is needed to increase housing market liquidity.
