As anticipated, a new Stamp Duty Land Tax (SDLT) surcharge for non-UK resident buyers was announced in the Budget on 11th March. Surprisingly though, the tax hasn’t been introduced straight away and will be implemented for completions on or after 1st April 2021. Also, at 2%, this surcharge is lower than the 3% previously indicated though it will be in addition to all other payable SDLT in England and Northern Ireland.

As with previous SDLT changes there was a flurry of activity in the lead up to the Budget from those hoping to beat the expected tax rise. Over the next year or so, we anticipate buyers who will be impacted to bring forward decisions in order to beat the new deadline. An increase in market activity is likely to be most noticeable at the back end of this year and beginning of 2021.

Once the surcharge has been introduced next year, London’s ranking on the global stage – in terms of buying, holding and selling costs – will change.

The overall cost of a $2 million property for non-resident, second home buyers in London will move above Los Angeles and Paris. However, it won’t make a huge difference and London will still remain cheaper than Hong Kong, Singapore, Tokyo and Sydney. In particular, the cost of holding property in London is cheap in a global context.

As we expected, the Budget did not contain any mention of a cut in the underlying rate of SDLT. We believe that this is unlikely in the short to medium term, given the spending commitments set out by this Government.

However, some other buyers had held back purchases in the hope of such a cut and so we saw a number of transactions take place immediately after the Budget. Despite some of the short term headwinds facing the market, in due course we expect those who have been sitting on the fence in the hope of a tax cut to bring more stock to the market, increasing choice for buyers across our prime markets.

Further information

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