Non-UK residents buying homes in England and Northern Ireland could soon face steeper stamp duty costs, under proposals being considered by the government.
The government is currently seeking views on whether foreign buyers should pay a 1% surcharge on top of existing stamp duty rates, in a move designed to prevent overseas purchasers pushing up the cost of housing.
The surcharge, first announced during last year’s Conservative party conference and then covered again in November’s Budget statement, would apply to purchases of both freehold and leasehold properties.
Speaking at the conference, Theresa May said: “It cannot be right that it is as easy for individuals who don’t live in the UK and don’t pay taxes here, as well as foreign-based companies, to buy homes as it is for hard-working British residents.”
The consultation is due to end on 6th May
Current stamp duty costs
Stamp duty is payable when purchasing a property costing over the stamp duty threshold, which is currently £125,000. However, first-time buyers who have never previously owned property don’t have to pay stamp duty on the first £300,000 of the property value if buying a home costing up to £500,000.
The amount of stamp duty homebuyers must pay is a percentage of the purchase price and that percentage will depend on the value of the property. For example, stamp duty is charged at 2% on the portion of the property costing between £125,001 and £250,000 and 5% on the portion costing from £250,001 up to £925,000, with higher rates payable on properties costing more than this.
That means if you were buying a home costing £500,000, you’d have to pay stamp duty totalling £15,000. Our stamp duty calculator tells you how much stamp duty will cost you based on the value of the property you’re buying.
If the government’s proposed surcharge is adopted, foreign buyers would have to pay 3% on the portion costing between £125,001 and £250,000 and 6% on the portion costing from £250,001 up to £925,000, meaning stamp duty on the same £500,000 property would cost them £18,750.
Overseas buyers to pay higher stamp duty