16 Dec 16.12.2019 New SDLT surcharge proposed for non-UK resident homebuyers
16.12.2019 New SDLT surcharge proposed for non-UK resident homebuyers
The UK government is considering the introduction of an additional 3% stamp duty land tax (SDLT) surcharge on purchases of residential property in England and Northern Ireland by overseas buyers.
The measure was first introduced in 2018 November Budget and is designed to target rising house prices, which the government believes is being driven in part by purchases of UK property by non-UK resident buyers.
Non-resident homebuyers currently pay the same rates of stamp duty land tax as those living in the UK.
The Conservatives said homes that were snapped up in the UK were “often bought by wealthy individuals or companies, and kept as investments or rented out at inflated prices”. A 2017 York University study showed that 13% of new London homes were bought by non-residentsin 2014-16.
“This adds significant amounts of demand to limited supply, inflating house prices and making it harder for people in Britain looking to get a foot on the property ladder,” they said.
The consultation published by the government at the beginning of the year proposes an additional surcharge on top of all existing SDLT rates, including freehold and leasehold purchases of residential property and the rates applicable to the rental element of leasehold property.
The charge is going to apply to non-UK resident individuals and companies, including certain UK-resident companies, which are controlled by overseas shareholders.
The consultation defines a non-UK resident individual as someone who has spent fewer than 183 days in the UK in the 12 months ending with the date the transaction occurs. An individual who spends more than 183 days in the UK in the 12 months following the transaction would be eligible for a refund.
The consultation also proposes a corporate residence test. Corporate purchasers would be treated as UK-resident for the purposes of the surcharge if they are incorporated in the UK, or their central management and control is exercised in the UK at the time that they acquire the residential property. Companies that do not meet these tests would be classed as non-resident, and therefore liable for the surcharge.
The measure is estimated to affect up to 70,000 transactions a year and raise up to £120m in revenue per year. This money it would set aside to tackle the problem of rough sleeping. The Conservatives said the policy was “not about nationality but residency” and would affect about 70,000 purchases a year.
“Evidence shows that by adding significant amounts of demand to limited housing supply, purchases by non-residents inflate house prices,”said the chief secretary to the Treasury, Rishi Sunak.
He added: “Britain will always be open to people coming to live, work, and build a life in this great country.”