Stamp Duty Land Tax Surcharge Consultation Underway

Stamp Duty Land Tax Surcharge Consultation Underway

Following the government’s vague promise to increase Stamp Duty Land Tax (SDLT) with a surcharge placed on properties bought by foreign investors during the Conservative Party Conference in October last year, the changes are about to come into force following a consultation process.

Any foreign investor in UK property, specifically in England and Northern Ireland, unable to prove that they have been a resident in the UK for at least 183 days prior to the purchase will be charged an additional 1% on the SDLT owed on the property. However, it will be up to the devolved governments of Scotland and Wales to decide if the surcharge will be imposed in their countries.

This surcharge also applies to first time buyers. Although foreign first-time buyers can still benefit from first time buyers relief, they will still owe the additional 1% surcharge.

However, the government have stressed that a refund will be applicable to foreign buyers that can prove they have been a resident in the UK for 183 consecutive days following the purchase date.

The rules will also become applicable to joint applicants where one of them is a non-UK resident.

The additional money has been pledged to help combat rough sleeping and the growing homelessness epidemic.

The consultation said: “The Government believes that introducing an Stamp Duty surcharge of 1% on non-UK resident purchasers of residential property in England and Northern Ireland will help to control house price inflation, thereby assisting residents in getting on to the housing ladder in line with the Government’s wider objectives on home ownership.”

Mel Stride, financial secretary to the Treasury, said: “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 1% 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.”

Camilla Dell, managing partner at buying agency Black Brick said after the surcharge was initially proposed: “You don’t solve Britain’s housing crisis by taxing and taxing again foreign buyers. Has the government forgotten that foreigners already pay a 3% surcharge when buying here? This has already had a detrimental effect on London – lowering transaction volumes, creating an illiquid and dysfunctional property market.”

The consultation period ends on 6 May 2019.

Will this additional surcharge dissuade foreign investors from purchasing UK property? Will this have a significant impact on the conveyancing sector?

Martin Parrin

Martin is a Senior Content Writer for Today’s Conveyancer, Today’s Wills and Probate, Today’s Legal Cyber Risk and Today's Family Lawyer Having qualified as a teacher, Martin previously worked as a Secondary English Teacher that responsible for Head of Communications. After recently returning to the North West from Guernsey in the Channel Islands, Martin has left teaching to start a career in writing and pursue his lifelong passion with the written word.

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