The Budget: what the 2% stamp duty surcharge for overseas buyers means for London
The first Budget for new Chancellor Rishi Sunak was always going to be dominated by the coronavirus, with plenty of support measures rightly announced for those people and businesses who have so far been affected.
But there was mention of housing too, and the proposed stamp duty surcharge on overseas investors buying property in the UK, which had been trailed in the Conservative party manifesto, became reality. Well, almost, as it will not come in until April next year and will be set at 2 per cent, rather than the proposed 3 per cent. Although a stamp duty hike for non-UK property buyers had seemed a certainty before the Budget, we had hoped that the Chancellor might take the opportunity to backtrack in light of the Covid-19 epidemic, so it is a shame that he carried on regardless. Perhaps the delay in introducing it is down to fears that the market would have struggled to cope with its immediate implementation, given what else is currently going on. A 12-month delay, on the other hand, will give buyers time to organise themselves and reduce any harmful impact on the housing market.
Although the surcharge brings the UK into line with many other global property markets, frustratingly it will no doubt put the brakes on again just when we were beginning to see the London market on an upward trajectory. However, on the positive side, many foreign buyers purchasing in other currencies will be able to absorb this extra 2 per cent within the foreign exchange currency trade and still benefit from the downward correction in prices since the peak back in 2014.
At Nicolas Van Patrick, we still feel that London property looks fair value when compared to other global cities, and those buyers who wish to proceed can still do so before the 2 per cent surcharge comes into effect in April 2021. We are also grateful that a mansion tax, which was widely speculated about in the press before the Budget, didn’t come to pass. Perhaps, in the end, it turned out to be a step too far for a Conservative Government.