Following the end of the government consultation that took place in February – May 2019 https://www.gov.uk/government/consultations/stamp-duty-land-tax-non-uk-resident-surcharge-consultation the new non-UK resident 2% stamp duty land tax was announced in the first Brexit/COVID-19 budget on the 11th March 2020 delivered by Rishi Sunak the freshly minted Chancellor of the Exchequer.
In the government’s wisdom they have chosen to implement it in April 2021. With a toxic combination of a Brexit trade deal to be negotiated by the end of the year and a global health pandemic that would all but stop the world in its tracks this is the backdrop to this financial year and has resulted in the most unpredictable conditions for the property market we have ever experienced turning seasonal trends upside down and challenging normal house purchasing behaviour. The fact that a general election at Christmas meant that for the first time since the referendum we have a government with a decisive majority bringing a tsunami of voter confidence we have the scene set for a very unpredictable and dramatic year.
Many of you will now have questions about this tax, about its application, how this would work with your situation, specific details and what impact it would have but so far as we lack the official details from the government and HMRC this leaves a vacuum ready to be filled with rumour and speculation based on tenuous past government actions for guidance which has so far lacked consistency. This is clearly a very dangerous strategy in these unprecedented times.
We have seen near constant changes to the now convoluted system over the last five years and know that the only theme that can be identified is an understanding that previous governments have been characterised by their inability to devote time to work out the details before issuing headline grabbing announcements with political mileage. It is therefore safest to wait and study the small print before taking anything for granted. However, we fully understand that life cannot remain in limbo and it is important to run some scenarios and weigh up the risks to decide if action is needed and to settle the mind.
For many overseas purchasers London and the South East are popular destinations and more recently there has been greater appetite to explore further afield in search of greater value. New build developments, in particular, are very popular with foreign investors who view property in this country as a relatively safe prospect in an increasingly unpredictable world and mortgage finance more readily available for property in London.
Bishop’s Stortford is lucky enough to have world class schools whose reputation is a magnet to many families with its close transport links to the city of London and airport again attractive to overseas buyers where the aim is to migrate here in the near future or let property to others who would like to live in this location which beautifully illustrates a classic British work life balance away from the populous cities but also caters for family life.
One cannot help but wonder whether the original domestic agenda to use the tax to manipulate the housing market really would tip the balance to achieve more favourable conditions for UK residents at the expense of overseas buyers will ultimately have the desired effect when the world has now changed so much and it may be necessary to attract greater investment and give a much needed boost to the economy.
Whilst we may all be hoping for a government U-turn which cannot for now be ruled out as an option if the government intends to stimulate the economy after the lockdown it does leave the question open as to how a prudent overseas buyer proceeds to avoid paying over the odds for a property they could purchase now and avoid the risk of paying extra tax? The safest option would understandably be, to make the most of this year before the implementation and purchase a property ensuring that it completes prior to April 2021 to avoid the issue altogether.
Our experience tells us that there will be a spike as people start to grasp this direction of thinking and the ones who are willing to get ahead will have an ideal opportunity to take the most advantage of the current situation and achieve a favourable outcome.
For further information please contact Karen Chui on 01279 712573 or email kchui@nockolds.co.uk.