The additional stamp duty introduced in April 2016 and payable on second homes has unexpectedly generated much more revenue than the government had anticipated, as Emanuele Midolo’s report outlined - but a key aspect not fully explored is how this is partly due to the fact that many overseas investors are also caught by the additional liability.
That alone could prove disastrous for our already unstable housing market and I am certain that was not the intention. The evidence is clear that, since the introduction of this surplus liability, the knock-on effect is that many buyers are deterred from investing in the UK housing market, which is not good for our economy and the many businesses that need the work it generates to survive.
The 3% surplus stamp duty applies to anyone who owns a second property anywhere in the world.
We hear and read about it affecting buy-to-let investors but, in real terms, it is affecting a large number of ordinary buyers who own property abroad and simply want to purchase a property in the UK. It is also clear now that these changes have proved to be extremely unpopular in many areas of the housing market, as shown by the swell of support for Property Week’s Call Off Duty campaign.
Ben Southwood, head of research at the Adam Smith Institute, and Gráinne Gilmore, partner and head of UK residential research at Knight Frank will be joining Residential Land chief executive Bruce Ritchie and interior designer and TV personality Celia Sawyer on a panel debating the controversial reforms to Stamp Duty Land Tax (SDLT) tax at RESI 2017.
It is essential for the continued growth of our property market and for investment in the UK that the government either offers an exemption on the surplus duty or a reduction in stamp duty for anyone looking to buy property here but living outside our jurisdiction.
Hopefully this would encourage much more investment in the UK. This is especially important with Brexit around the corner and at a time when we need to be even more creative and proactive in encouraging investors from worldwide and not lose out because of over-complicated and now onerous stamp duty liabilities.