The government has launched an official consultation about a new stamp duty surcharge - the long-awaited additional one per cent for non-UK residents and companies buying residential property in this country.
It was first announced during the Budget in November with Chancellor Phillip Hammond promising a consultation in January. The absence of an announcement last month prompted speculation that the government may have abandoned the idea; but this now appears not to have been the case.
Mel Stride, Financial Secretary to the Treasury and Paymaster General, says: “The UK is and will remain an open and dynamic economy, but some evidence shows that non-UK resident buyers of UK property could be inflating house prices. A one per cent surcharge could help more people own their own homes in the future, and its proceeds will go towards tackling rough sleeping, boosting our plan to halve the numbers of rough sleepers by 2022.”
The consultation will cover all aspects of the charge, including how non-residents will be defined and how it applies to companies. The Treasury says further details will be published after the consultation has concluded on how much the charge is expected to raise.
The charge will apply to any person who is non-resident in the UK, including certain UK-resident companies which are controlled by overseas shareholders. However, crown employees working abroad – such as military service personnel – will not have to pay the surcharge at all whilst those who buy a residential property and then move to the UK will be eligible for a refund of their extra payment.
At the time of the initial announcement in the November Budget, the proposal received short shrift from the agency industry.
Rory O’Neill, then head of residential at Carter Jonas said: “In its attempts to maximise tax revenues from millionaire purchasers, the Treasury is facing an inevitable point of self-sabotage, as the breakdown it has exerted on the market as a result of its punitive stamp duty reforms is finally diminishing its revenues due to lower transaction volumes.”
Meanwhile Guy Bradshaw, director of central London sales and lettings at UK Sotheby’s International Realty, said: “We’re pleased to see the government climb down from the original three per cent stamp duty levy … It’s absolutely crucial that an extensive and collaborative consultation process takes place in January where we hope the government continues to listen to the genuinely detrimental impact this could have on an already fragile London market.”
London agent Trevor Abrahmsohn of Glentree Estates added his voice saying: “The numbers of properties being bought by foreign individuals today has dropped from a torrent, to a trickle and now a drip, and any additional tax, would have ‘killed off’ this market altogether and, by doing so, further increase the pain on developers, particularly in London.”
You can see the full 42-page consultation document here.