The proposed 3% SDLT surcharge for foreign nationals is an ill-conceived policy. While it is laudable to want to help the homeless, this policy does it in a way that is going to cost the UK far more than it helps.
With Brexit looming and all of the significant harm that is doing to the economy, the government should be doing everything it can to say to foreign investors that the UK is “open for business”. This policy does quite the opposite: penalising foreigners who want to work here, invest here and own a home here.
The government appears to have forgotten that there already is a policy in place that charges foreigners a 3% surcharge when buying a home in the UK: the second home rules, whereby any purchase of a second home attracts the extra 3% charge. By definition, 99% of foreign buyers already own a home in their country of nationality, which means they are automatically paying 3% more than a UK resident buying their first home.
This and the previous SDLT increase has already had a detrimental effect on the property market – lowering transaction volumes and prices.
The policy is forecast to raise between £40m and £120m and while these are not small sums, they are insignificant when set against the reduction in investment the UK is going to see as a result of this policy and the message it sends out.
The government would do much better to try to solve the housing crisis where the problems really exist, the supply of new homes being built, rather than taxing foreign investors so much that they decide to take their hard-earned investment to another country, thereby costing the UK economy dearly.
Uma Rajah, CEO and co-founder of CapitalRise