Conservative party set to raise SDLT for overseas buyers
Published: 27/11/2019The Conservatives have unveiled plans ahead of their manifesto launch to increase Stamp Duty Land Tax (SDLT) by 3% on purchases of property by non-UK tax residents (both companies and individuals) including expats returning home. The money raised, which is estimated to be £120 million, would be set aside to tackle rough sleeping.
A Treasury spokesman has stated on BBC Radio 4 in relation to this plan that “It will have a positive impact on home ownership and a reduction in house prices.“ Their aim is to prevent overseas purchasers from buying up stock and inflating property prices which they see as reducing the supply of property and making it more difficult for UK residents trying to get onto the property ladder.
This extra 3% will be in addition to all other SDLT payable, including the existing 3% surcharge on second homes and buy-to-let properties which has been payable since 2016.
The top rate of SDLT is currently 12% on that portion of the price in excess of £1.5 million (see table below). Taking into account the 3% surcharge on second homes, this could lead to 18% being payable by overseas buyers.
This is likely to affect property developers who often sell to overseas buyers, thus potentially damaging the ability to build new homes. However some commentators think it will encourage sellers to be willing to soften prices which happened under previous SDLT increases.
We do not think this will put off the majority of non-UK buyers as many overseas investors are looking for long term safety for their money as well as a base in a thriving cosmopolitan city. London is likely to remain popular in this respect due to its location, culture and accessibility as well as the fact that it remains a financial centre and comes with the added benefits of good schools, first class health care, quality shopping and the Arts.
|Purchase Price bands (£) Percentage rate (%)||Percentage rate with 2ndhome surcharge (%)||Percentage rate with proposed overseas buyer & 2ndhome surcharges (%)|
|Up to 125,000 0||3||6|
|Above 125,000 and up to 250,000 2||5||8|
|Above 250,000 and up to 925,000 5||8||11|
|Above 925,000 and up to 1,500,000 10||13||16|
|Above 1,500,000+ 12||15||18|