There will be a two per cent stamp duty surcharge on the purchase of UK investment properties by non-resident overseas buyers - as promoted in the Conservative 2019 election manifesto. It will come into effect in April 2021.
However, there will be no other changes to any stamp duty for the mainstream housing market.
Chancellor Rishi Sunak, who made the announcement in his Budget this afternoon, also confirmed that the £650m which the surcharge would raise would be directed to help around 6,000 rough sleepers into permanent accommodation.
Other measures announced by the Chancellor which may affect agents include:
- agencies and all firms with fewer than 250 employees will have sick pay refunded by government in full, for up to 14 days, for any staff member off work because of Coronavirus;
- business rates for some retail operators with rateable value under £51,000 to be abolished for this year - some other businesses will get a £3,000 cash grant - agents are advised to consult their local authorities to see if they qualify;
- a review of the long-term future of business rates will be launched at an additional Autumn Budget later this year;
- 4G coverage in 95 per cent of the country in the next five years;
- a planning white paper will be announced tomorrow, Thursday March 12;
- an extension of the Affordable Homes Programme with a new multi-year settlement of £12 billion;
- there will be an extraordinary increase in infrastructure spending, adding up to some £175 billion over the course of the current parliament, before General Election in 2024. This is in addition to a £30 billion emergency package of spending and grants this year to counteract Coronavirus.
Agents and other industry figures have expressed disappointment at the stamp duty surcharge but, for some, relief there have not been further fiscal attacks on the housing sector.
Mark Hayward, chief executive of NAEA Propertymark, says: "Overseas buyers tend to purchase properties in prime central London which are completely unaffordable to most homebuyers anyway. Therefore, this move will not help those that need it most. Ultimately, by energising surcharges, it is likely that purchasers will factor this additional cost into any offers they make on a property so prices may be pushed down in areas where overseas buyers are purchasing.”
Winkworth says the Treasury should stop tinkering with stamp duty and introduce tax incentives for landlords to encourage them to sell to tenants. Chief executive Dominic Agace says: "Stamp duty is a real negative for the property market as it discourages people from moving, particularly downsizers. This has a knock-on effect on the flow of employment, which is bad news for businesses trying to recruit, especially in London and other major cities. A better route would be to encourage property investors to sell to tenants by offering capital gains incentives. Currently, an investor who sells a rental property is liable to pay capital gains tax at 28 per cent on any profits they make, which is a big disincentive to selling up. If tax relief were introduced, the tenant could also benefit, by receiving some of the proceeds as a mortgage deposit."
Tom Bill, the head of London residential research at Knight Frank, comments: “The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets. 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. Furthermore, a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”
Stacks Property Search, a buying agency, says on Twitter: "Relieved that the Chancellor has largely left SDLT alone. The two per cent surcharge for non-resident buyers is digestible - look at the property taxes they pay elsewhere."
The chief sales officer at PropTech company PayProp, Neil Cobbold, adds: "An additional two per cent stamp duty surcharge for overseas investors will certainly have an impact on the demand for properties in England's major cities. We will have to wait and see whether disincentivising overseas buyers causes a shortage of rental homes in the long-term. Changes of this type – and reduced competition from overseas - would encourage more domestic landlords to invest in further properties and provide more homes for the growing tenant population."