"Intermediaries are vital allies for overseas buyers, as they want to tap into the local expertise offered by advisers."
However, it’s certainly not the only stamp duty change on the horizon to be aware of. From the 1st April 2021, new rates of the tax will apply to overseas buyers, with these buyers now facing a 2% surcharge above the rates paid by UK residents.
Unsurprisingly, this has led to a swell of activity. Intermediaries don’t need long memories to recall the way that landlords rushed to get their purchases over the line before the introduction of a higher stamp duty rate on second home purchases back in 2016, and we have seen a similar spike in interest this time around too.
It’s understandable too - with overseas buyers often interested in properties at the higher end of the market, the money saved on that tax bill is significant if the transaction can be concluded before April arrives.
However, it would be wrong to expect business from overseas buyers to drop off a cliff once this new stamp duty rate is in place. The reality is that the foundations are there for interest in UK property to remain strong from overseas buyers, long after the new stamp duty rates are in place.
For example, one of the big attractions of UK property to overseas investors has always been the strong capital growth on offer. It’s well known that there is a sharp housing shortage in the UK, which has only been exacerbated by the slowing rate of housebuilding seen over the last year due to the pandemic. Demand continues to outstrip supply, and likely will for some time to come, which can only continue to push house prices up.
The UK enjoys a fantastic pull with overseas buyers simply based on the location too. Irrespective of Brexit, the UK remains a vibrant business centre and home to some of the most prestigious universities in Europe. The ability for overseas buyers to set up a home here, not just for themselves but for their families too, cannot be underestimated.
It’s also difficult to ignore the vaccine effect. Britain is seen as something of a safe haven among international buyers at the moment precisely because of the success of the vaccine rollout here and confidence in how we are moving out of the pandemic. Knight Frank has reported seeing interest in properties above the £10m mark more than double since last January, but there has been shortage of interest further down the price chain too.
Intermediaries are vital allies for overseas buyers, as they want to tap into the local expertise offered by advisers. This can make all the difference between a smooth purchasing experience, and one that drags on interminably.
One element to bear in mind with overseas buyers is that time is often of the essence when it comes to a property purchase. They want to secure that property quickly.
The ability to act fast is already vital in the property market at the moment given the competition faced by buyers of all kinds, and that’s where working with the right bridging lender can make all the difference. Opting for a partner who can not only deliver the funds rapidly, but who also understands the unique challenges that can crop up with an international purchase, means that you can ensure your client lands that dream property.
There is no shortage of stamp duty upheaval on the horizon in the months ahead. But it won’t act as a hard cliff edge for demand from overseas investors, and intermediaries will once again have to help those investors to land the fast finance needed to purchase in the UK.
