The higher charge has been applied to freehold and leasehold properties in England and Northern Ireland. The cost of stamp duty land tax (SDLT) which is payable on rents upon the grant of a new lease, has also been increased for non-UK residents.
Propertymark members have warned of chains falling through due to the charge applied to non-UK residents as a reason for decreased property sales.
Additional stamp duty charge
The additional charge is causing confusion as overseas buyers are classified as non-UK residents if they did not spend at least 183 days in the UK during the 12 months before purchasing. An issue which has been exacerbated by widespread travel bans due to the COVID-19 pandemic.
However, the UK Government stated buyers who are present in the UK for at least 183 days within two years before the property is purchased may be eligible to claim a tax refund.
Trends bought to light by NAEA Propertymark Regional Executives show that the increase in stamp duty for non-UK residents is already having a knock-on effect and buyers are pulling out of sales due to the additional fee.
The continuous question of when travel restrictions will be gone for good and the uncertainty of how and when the world will ‘return to normality’ seems to hold a weight over those classed as ‘non-UK residents’ with the aspirations of purchasing a property
Some non-UK based buyers are committing to purchases unbeknown to them that more stamp duty charges may be coming their way.
The property sector has a collective responsibility to help educate buyers on this issue so they can obtain independent tax advice. This assists all parties and reduces the risk of transactions collapsing due to lack of awareness of key information, which may impact some purchasing decisions.
