Stamp duty hike for foreign buyers ‘contradicts Brexit claim’

Agents have reacted angrily to General Election proposals by all three main political parties to hike stamp duty for foreign buyers.

The Conservatives want a three per cent surcharge on non-resident overseas buyers as individuals or companies; Labour wants a 20 per cent surcharge but on overseas company purchases only; and Liberal Democrats have made a general pledge to tax foreign purchasers more heavily.

A London estate agent has spoken out against the Tory three per cent proposal specifically. At the end of last week the Conservatives announced that the measure would take the heat out of the housing market; the party claims the measure will affect about 70,000 transactions a year, raising £120m, which would be spent on programmes tackling rough sleeping.

Chief Secretary to the Treasury Rishi Sunak says: "Evidence shows that by adding significant amounts of demand to limited housing supply, purchases by non-residents inflate house prices.”

He adds that the UK will "always be open to people coming to live, work, and build a life in this great country", saying: "The steps we are taking will ensure that more people have the opportunity of a great place to live and build a family."

But prime property expert Charlie Smith, of London Real Estate Advisors - who works with UK and international clients on the sale and acquisition of high-end property, said the latest announcement could be a scene from vintage comedy series Yes Minister. 

"The irony of the Conservative mantra to get Brexit done, so we may forge new international trade agreements building truly worldwide partnerships, whilst penalising ‘foreigners’ from coming to the UK reaches Yes Minister proportions. Without an overall reform of stamp duty, it will deter inward foreign investment, with the loss of all the additional benefits from people coming here, to either make the UK their home or a place to frequently visit” he says.

Smith believes that many other major cities - he cites New York, Paris, Milan and Frankfurt - encourage inward foreign investment, making it disappointing to put such a handicap on London.

"Boris Johnson promised overall reductions in SDLT just a few month ago, which is now being reneged, so while the idea of using the additional proposed levy to tackle homelessness is a noble one, the trust is so utterly lost in modern politicians, nobody will believe this will happen. Sadly, this is just a sound bite to soften the announcement."

Another agent - Camilla Dell, managing partner at buying service Black Brick - has also opposed the move.

She says: "It is unlikely to deter buyers at the top end of the market, who continue to benefit from weak sterling and substantial price falls. However, it could well put off middle class overseas investors in somewhat cheaper properties, many of whom invested in new-build apartments on a buy to let basis. This could have the unintended effect of slowing development in the capital."

RICS spokesman Hew Edgar says: “The Conservative Party need to recognise that it is a lack of supply, driven by failure to build enough homes that is limiting first time buyer potential, rather than increases in second home ownership.”

And he adds: “An additional unintended consequence of this surcharge, therefore, is higher end housing market providers being be deterred from development, which could have negative consequences across the housing market.”

When he was London mayor, Boris Johnson said it would be wrong to "slam the door on the right of overseas residents to buy homes in London - notwithstanding the effect they may have in some parts of prime London on the market".