UK Foreigner stamp duty

Editorial Team
Editorial Team

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One of the first few questions that a potential property investor in the UK will be, how much stamp duty do I have to pay?

Stamp duty is one of the most important cost of investment that investors will need to consider as it forms a major part of the cost of purchase. For those that are unfamiliar, stamp duty is one of the taxes that property buyers must pay to the Government.

How much stamp duty do overseas investors need to pay?

Currently, stamp duty is calculated through a tiered basis. For buy-to-let, which is the category that all overseas property investors will fall into, the first £125,000 starts from 3%. If your property price cost more than £125,000, the next tier of stamp duty will be at 5%. For example, if your property price is at £250,000, you stamp duty fees will be (£125,000*3% + £125,000*5%) which equals to £10,000. Take note that these rates are only applicable to properties located in England and Northern Ireland.

The UK Government also require foreigners to pay an extra 2% after 31st March 2021. If we were to use the same property as an example, that would equate to an additional £5,000 in stamp duty payable, totalling up to £15,000 for a property that cost £250,000.

Stamp Duty Holiday

For those that are looking to save on stamp duty, the good news is that the UK government has announced a stamp duty holiday for properties that are completing before 31st March 2021. With the stamp duty holiday, investors can expect to only pay 3% for properties below £500,000. Using the same example as above of a property price at £250,000, the stamp duty that you will pay is only £7,500.

The stamp duty holiday is part of the government’s effort to stimulate the economy by promoting property purchase given the current coronavirus situation. For the investor, a lowered cash outlay is always welcomed as it would also mean a higher return on investment. However, to take advantage of this, you will need to search for projects that complete before 31st March 2021 like Mount Yard at Manchester and Cliveland House at Birmingham.

How can you take advantage of this?

Fundamentally, property prices in the UK have been very resilient despite many past crises. Despite that, it is still important to look at the potential growth areas before making your investment decisions. As a research centric real estate agency, Crestbrick does all the heavy lifting in terms of identifying the growth areas, doing the due diligences, and analysing your property portfolio. If you are wondering how you can take advantage of the stamp duty holiday to further expand your global property portfolio, speak with one of our Crestbrick representatives today!

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