Theresa May’s announcement at the Conservative Party conference that foreign investors into the UK property market were going to be targeted with an additional SDLT levy has caused further consternation within the industry.
Asserting a determination to “level the playing field” for those who live and pay taxes in the UK, the Prime Minister paved the way for yet another stamp duty surcharge, building on the higher levels already introduced for second homes and for corporates purchasing residential properties. Whilst ostensibly aimed at the overseas oligarchy whose empty penthouses attract the continued ire of many who are struggling to get onto the property ladder, developers have claimed that the charge will have a negative impact on viability and thus reduce the more general supply of new housing stock coming to market – precisely the opposite of the intended effect.
What is beyond doubt is that the announcement follows a clear pattern and policy trend of targeting particular types of buyer through increased tax take. These have included:
- An additional 3% on top of normal SDLT rates if buying a residential property that means you’ll own more than one.
- A flat 15% SDLT rate on residential properties costing more than £500,000 when purchased by certain corporate bodies or ‘non-natural persons’ – and, in some circumstances, a 3% surcharge when the price is less that £500,000 (but more than £40,000).
- The ‘Annual Tax on Enveloped Dwellings’ (ATED) – an annual levy on the value of residential property (above a threshold value of £500,000 per separate dwelling), again where held by non-natural persons.
As ever with SDLT, the devil will be in the detail when it comes to analysing the implications of this latest additional charge. The industry waits to see what further detail, if any, will be revealed in the Autumn Budget at the end of this month. In the meantime, it does seem apposite to ask: to what extent is the UK really “open for business”?