Tories plan 3% surcharge on overseas home buyers
22 Nov 2019
Overseas homebuyers would face an additional 3% stamp duty land tax (SDLT) surcharge on any UK houses they purchase under a future Conservative government, the party has announced
22 Nov 2019
The plan to increase SDLT for non UK residents who buy property is intended to stop foreign investors leaving homes empty, or renting them out, in a bid to cool house price rises and increase the availability of housing.
According to a study in 2017 by the University of York, 13% of new London homes were bought by non-UK residents in the previous two years.
The 3% surcharge would apply to companies as well as individuals, and potentially also to expats wanting to move back. Conservative party estimates suggest it would impact around 70,000 purchases a year in England and Northern Ireland.
The policy announcement is similar to one made by previous prime minister Theresa May at the Conservative party conference in 2018. At that point, the surcharge was put at 1%, with the money raised going to support projects to end rough sleeping. The current proposal would also direct revenues to similar work.
Rishi Sunak, the chief secretary to the Treasury, said: ‘Evidence shows that by adding significant amounts of demand to limited housing supply, purchases by non-residents inflate house prices.
‘That is why we are introducing a higher rate of stamp duty for non-UK residents that will help to address this issue and could raise up to £120m.’
HMRC held a public consultation on the 1% surcharge proposal which closed in May, but has not published any details of the outcomes from the 12-week exercise.
The proposed 3% additional SDLT would be charged on top of all other stamp duty already payable, including the 3% surcharge on second homes and buy-to-let properties that took effect in 2016.
Other countries and cities have already introduced surcharges on foreigners buying property. In August 2016, the Canadian city of Vancouver announced amendments to the Property Transfer Tax Act, which saw an additional 15% tax levied on all residential property purchased by foreign buyers. This was subsequently raised to 20%.