Property experts expect a rush from overseas property investors looking to save hundreds of thousands before the new foreigner stamp duty surcharge is introduced in April 2021 . Image by PA.
Time is ticking — and it’s ticking FAST. From April 2021, the price of property will increase significantly for foreign investors, up to hundreds of thousands*!
If you’ve been thinking about investing in UK property, don’t wait too long. Foreign investors have 1 year before prices increase.
UPDATED 12 MARCH 2020
Come April 2021, the UK government will impose an additional hefty 2% stamp duty surcharge on all foreign investors. Currently, foreign investors pay the same stamp duty rate as UK buyers. This is on top of the existing 3% stamp duty surcharge imposed on second properties.
Even if this is your first UK property purchase, it still counts as a second property if you already own a property in your home country or anywhere else in the world.
And, the cost could be painful. A property costing £500,000 incurs a total stamp duty surcharge of £40,000 while a property that costs about £1mil will be charged a stamp duty surcharge of £93,750. The final purchase sum will be hefty.
|STAMP DUTY (WITH 2ND PROPERTY SURCHARGE)||£73,750||£30,000|
|TOTAL STAMP DUTY COST (WITH NEW 2% FOREIGNER SURCHARGE)||£93,750||£40,000|
In 2016, there was a rush for property when the UK government imposed a surcharge on second properties. Property experts are bracing themselves for a rush from foreign investors looking to take advantage of savings before the new 2% foreigner stamp duty surcharge is imposed in April 2021.
As an investor, you might wonder if the new stamp duty foreigner surcharge affect house price growth in the UK. Based on data-led evidence, it looks highly unlikely. See chart below:
TOP 4 REASONS WHY FOREIGN INVESTORS INVEST IN UK PROPERTY
Despite Brexit, the UK economy has remained stable and remains a popular investment destination. Here are the top 4 reasons why:
1. Strengthening currency
The Pound is strengthening after taking a nosedive during the EU Referendum. With renewed clarity in terms of the UK’s future with the EU, the Pound will strengthen further. Take advantage of affordable exchange rates now.
2. Increased market confidence
The UK economy has remained stable through the past 3 years of uncertainty following the EU Referendum. However, the market and economy are showing a rebound, thanks to more political certainty after the General Election in Dec 2019 and a decision on Brexit, with the UK leaving the EU on 31 Jan 2020.
3. Price growth of 14.8%
The UK property market is underpinned by strong demand and low supply. Not even Brexit could dampen the growth of house prices in the UK. With more certainty in the market and economy, house prices are predicted to grow 14.8% by 2024 (JLL).
4. Global safe haven
The UK continues to remain a global safe haven for investment. It has been named the hottest investment destination in the world by Ernst & Young.
If you missed out on savings from the stamp duty surcharge in 2016, you don’t want to miss another opportunity to save now.
* Based on property purchase price of approximately £1mil. Conversion of £1: RM5.3
By Vivienne Pal
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