This will further increase the costs of purchasing residential property in England and Northern Ireland for non-UK residents. Although the details remain sketchy, the proposed 2% surcharge would presumably be on top of the additional 3% already charged to those purchasing an additional residential property, which is not their main residence.
The main SDLT rates on residential property increase sharply for those investing in high-value residential property, topping out at a rate of 12% for properties over £1.5m. As most non-UK residents would effectively be paying 15% after the additional homes surcharge is taken into account, they would potentially be facing a rate of 17% from 6 April 2021.
In the short term, those non-UK residents considering further investment into the UK residential property market may wish to consider bringing forward their investment plans, if they have not already done so. With an introduction date still over a year away, there could be time to invest prior to that date and avoid the potential surcharge, depending on the availability of finance and suitable properties on the market.
While there may be a short term bounce in terms of sales prior to 1 April 2021 as a result of this, it will be interesting to see if the proposed surcharge leads to a dampening of the high-value residential market in the long term.
Read more on the Budget here.