2% Stamp Duty Surcharge For Foreign Buyers
As of today (April 1st 2021!) non-UK residents now have to pay an extra 2% stamp duty on any property that they buy in England and Northern Ireland.
This has made a range of non-UK home buyers at a range of different price ranges/ price bands purchase their next dream home quickly, to avoid the extra 2% charge.
However, what might this mean for non-UK residents who are looking to buy a home in London from today onwards…?
What it will in all likelihood do is simply make non-UK residents pause and take stock and really try and work out if they want to live in London.
On a £1,000,000 purchase, they’ll be paying an extra £20,000, on a £2,000,000 purchase, they’ll be paying an extra £40,000, on a £3,000,000 purchase, they’ll be paying an extra £60,000, etc…
“Savings from asking prices are dependent on a range of factors, with one of the main ones being the speed at which the sellers has to sell.”
It may initially seem that the new 2% stamp duty surcharge will automatically negatively impact non-UK home buyers and will put them off from buying.
When looking at the facts, yes, they will pay an extra 2%. However, prices are still way down from when the market peaked 7 years ago and with some good negotiation skills, they could well save 1% - 2% on the asking price anyway.
Saving 1% - 2% from the asking price is certainly not as simple as a buyer saying “we’re a foreign buyer, therefore we will pay 2% less” as the seller could and probably should wait for a UK resident to come forward to make an offer on the property.
Savings from asking prices are dependent on a range of factors, with one of the main ones being the speed at which the seller has to sell…
If they have to sell it in a shorter time frame, they could well accept a lower offer…
It will be fascinating to see what impact this 2% surcharge has over the coming weeks, months and indeed years.
If you are a non-UK resident, out of interest, has the new 2% stamp duty charge made you pause and reflect on whether you want to purchase a property in London?