The surcharge proposal is being considered as part of the Government’s effort to help control rising house prices. The proceeds of the new surcharge will also be put towards measures to tackle rough sleeping, which the Government is committed to ending by 2027.
Summary of our response
In our response, we made it clear that we did not think that the proposed surcharge would have the desired impact that Government is hoping for.
Non-UK purchasing decisions
Typically overseas investors purchase high-value properties often paying the top rate of SDLT, and a further three per cent of SDLT on additional properties, the one per cent surcharge may not have a significant impact on their purchasing decisions. Though we do agree it may have a slight impact on those looking in the lower end of the market.
What we may see as a result of the surcharge is overseas investors making use of the choice between the six or more dwellings exemption and Multiple Dwellings Relief to avoiding the top rates of SDLT.
UK homeownership levels
The proposed surcharge will do little to improve the level of homeownership for UK residents in England and Northern Ireland. Non-UK resident buyers are often area-specific, largely purchasing property in major cities meaning the policy will have little impact elsewhere. Many of the surveyed NAEA Propertymark members working in the less urban areas stated that they rarely or never make sales to non-UK residents.
Property prices
House price inflation differs from region to region across the country. For example, in the first quarter of 2019 house prices decreased in the south-east and north-east of England, Yorkshire Humber saw no growth, whereas houses prices increased in the Midlands and the north-west. For this reason, it may only make a change in certain areas. Conclusively, we do not see a strong enough argument for the proposed one per cent surcharge having any major impact on house price inflation accross England and Northern Ireland as a whole.
