British chancellor Rishi Sunak announced the imposition of a two per cent upfront tax surcharge on non-resident property buyers in the UK as he unveiled his first budget on Wednesday.
The move fulfills a commitment in the ruling Conservative Party's election manifesto from last year, though the rate is slightly below the three per cent rate published during the 2019 election campaign.
Mr Sunak also said the measure would be delayed by a year and come into force in April next year.
"I’m confirming today that our manifesto promise to introduce a new stamp duty surcharge for non-UK residents will be introduced at a rate of 2% from April 2021," he said.
Buyers from outside of the UK pay the same rates as British-based purchasers but the government has been underpressure to free up the supply of available homes to domestic residents amid a housing shortage.
The two per cent is likely to be levied after the existing stamp duty taxes which are tiered alongside the property's value as well as a three percent levy for those buying a second home.
The top rate of stamp duty is 12 per cent on properties selling for more than £1.5 million.
“Non-resident buyers will breathe a sigh of relief that the Stamp Duty surcharge will not be introduced this year and will be one per cent lower than expected," said Sean Randall, a partner at Blick Rothenberg, the leading tax and advisory firm. "However, it will be introduced and appears to be driven by political imperative rather than economic theory."
The Conservative manifesto said the move would help rebalance the market in areas where overseas demand had skewed the property market. It pointed out that apartments or houses were not being bough by end users. "They are often bought by wealthy individuals or companies and kept as investments or rented out at inflated prices: a recent study showed that 13 per cent of new London homes were bought by non-residents in 2014 to 2016," it said. "This adds significant amounts of demand to limited supply, inflating house prices and making it harder for people in Britain looking to get a foot on the property ladder."
It added that the extra tax on foreign purchasers would address the issue of homelessness in city centres. "The measure will raise up to £120 million a year, and this money will be directed at programmes to help tackle rough sleeping."
In fact the two per cent hike will raise just £100m according to Treasury estimates when it takes force from April 1, 2021.
The budget announced a much bigger package to tackle the rough-sleeping issues. "I’m confirming nearly £650m of funding to help rough sleepers into permanent accommodation," Mr Sunak said. "That will buy up to 6,000 new places for people to live."
Other rumoured incentives for first time buyer to enter the market, possibly funded by an exit tax on properties as well as the stamp duty at the time of purchase, did not appear.
Experts predicted a upsurge in foreign-based transactions in the year before the tax takes effect.
"Although a crowd-pleaser, these stamp duty changes will have little impact on the housing market," said Jamie Morrison, head of private client at accountancy firm HW Fisher. "Overseas buyers activity only accounts for a small part of the overall property market and so the impact of a 2 per cent hike in the rate for overseas buyers, while a blow, is not fatal."
The independent public spending board, Office for Budget Responsibility said sharp increases in UK property prices are in the pipeline. It predicted the market would be rising by 7.5 per cent next year before slowing towards 2024.
Over the five years from 2019, the OBR expects as 23 per cent rise in UK property values. Prior to Wednesday's budget it was predicting a 17 per cent rise.
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Brazil: Neymar (69'), Firmino (90' 3)
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Burnley 0
Man City 3
Raheem Sterling 35', 49'
Ferran Torres 65'
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Analysis
Maros Sefcovic is juggling multiple international trade agreement files, but his message was clear when he spoke to The National on Wednesday.
The EU-UAE bilateral trade deal will be finalised soon, he said. It is in everyone’s interests to do so. Both sides want to move quickly and are in alignment. He said the UAE is a very important partner for the EU. It’s full speed ahead - and with some lofty ambitions - on the road to a free trade agreement.
We also talked about US-EU tariffs. He answered that both sides need to talk more and more often, but he is prepared to defend Europe's position and said diplomacy should be a guiding principle through the current moment.
COMPANY%20PROFILE
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UAE currency: the story behind the money in your pockets
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
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Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
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Price: From Dh330,000 (estimate)
UAE currency: the story behind the money in your pockets
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
UAE currency: the story behind the money in your pockets
The%20specs
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WOMAN AND CHILD
Director: Saeed Roustaee
Starring: Parinaz Izadyar, Payman Maadi
Rating: 4/5
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UFC%20FIGHT%20NIGHT%3A%20SAUDI%20ARABIA%20RESULTS
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How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
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Four stars
The years Ramadan fell in May
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On sale: Now
Price: From Dh650,000
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LILO & STITCH
Starring: Sydney Elizebeth Agudong, Maia Kealoha, Chris Sanders
Director: Dean Fleischer Camp
Rating: 4.5/5
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
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