A proposed new stamp duty for overseas investors should not go ahead, Chancellor Philip Hammond is being advised.
Hammond’s most recent Budget, last October, featured a plan for a levy of between 1% and 3% on property purchases by foreign buyers. Prime Minister Theresa May told the BBC that the money raised would be put towards combating rough sleeping.
However London Central Portfolio, a property investment and advisory firm, have analysed the latest stamp duty returns and want the Chancellor to rethink the strategy.
“With the housing market in such a parlous state, it can only be hoped that Chancellor Philip Hammond will not implement an additional levy of 1% on non-residential purchasers, proposed in the last Budget” said LCP chief executive Naomi Heaton.
“This would seem to be particularly imprudent in light of the UK’s need to build on global investment as it exits the EU.”
Huge surge in overseas interest in NW England
Whether the introduction of this tax for foreign investors would affect the rapidly growing interest in the property market in the north-west of England is uncertain. Direct, non-stop flights linking Manchester with Mumbai, Beijing and Hong Kong are just one reason why the area is a focus for money from overseas.
Research from Juwai.com last year showed that interest in the region from China was 200% up on 2017, with their report claiming that the UK’s long-term outlook and economy were attractive despite the spectre of Brexit. Growing numbers of international students in Manchester and Liverpool are also attracting potential long-term investors.
“Foreign investors represent a significant proportion of buyers, particularly in new build developments,” Heaton adds. “The December LCPAca Residential Index recorded a 20.8% premium in Greater London for new build versus older stock.
Brexit roadmap required
“With developers currently struggling and scaling back projects, this new tax would not be welcome as the higher end stock enables developers to build out much needed affordable housing. It is also unlikely to have a material impact on tax revenues, given the recent trend of falling receipts, alongside steadily rising tax rates.
“HMRC’s 2018 stamp duty statistics do not paint a rosy picture of the UK housing market, with neither the buyer nor the Exchequer winning out. Until the government has a clear road map for Brexit, we are unlikely to see increased transactions and therefore increased revenues.”
