The government has confirmed in today’s Budget that it will introduce a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021. In effect, foreign buyers have 13 months to buy residential land if they do not want to pay the additional 2% surcharge (taking the top SDLT rate to 17%).
It is not surprising that the foreign buyer surcharge is to be introduced. There was a detailed consultation on this in early 2019 (see here). However, the 2% rate was a pleasant surprise because the Tories said in November 2019 there would be a 3% surcharge rate.
Notwithstanding the government’s stated rationale of helping more people into home ownership, it remains to be seen whether introducing a further surcharge (in addition to the supplementary 3% on additional properties) will have the desired effect. Given that new private rented sector development schemes are often popular with non-resident buyers, there is a risk that dissuading these buyers could impact the commercial viability of this type of scheme, and hence the supply of new housing to the market.
If you would like to discuss this further please contact Jamie Ward or your usual PwC Stamp Taxes contact.