"There will inevitably be a rush for foreign buyers to complete on new purchases before the April 2021 deadline."
Current uncertainties make the market difficult to read. However, given the relative re-stabilisation of the market following years of political uncertainty around hung parliaments and a lack of a clear path for Brexit, there are certainly more positives on the horizon than there have been for a few years.
There will inevitably be a rush for foreign buyers to complete on new purchases before the April 2021 deadline. This is likely to cause shifts in the domestic market as decisions have a domino effect on other buyers, sellers and brokers, both foreign and UK-based. However, overseas investment in UK property is nothing new and the current schemes in place for first time buyers should mean those who most need protection are receiving some of the assistance they need to get a foot on the property ladder.
It’s difficult to predict the effects on the market after this date but I don’t think we’ll see a major decline in foreign purchases. The fundamentals of why international clients purchase in the UK will not have changed and the increased tax rate will still be in line with many other major cities around the world.
Given the current climate and news agenda, I was not expecting to see any stamp duty changes for domestic buyers, but I wouldn’t rule them out in the future tenure of this parliament. The implications of leaving domestic stamp duty as it is will be limited by the current low interest rate and competitive nature of the mortgage market. Further assistance for first time buyers would seem the most logical potential change though.
Overall, the long-term fundamentals of the UK property market are still strong, and I think that we’ll start to see the positives of a majority government and less instability around Brexit in time. The higher cost of purchasing instigated by this new surcharge will be factored into the overall cost of purchasing property in the UK, which remains an attractive prospect for buyers across the world.
These are, of course, uncertain times financially.
It’s likely that the government’s pledges to support the economy during and after the Covid-19 outbreak mean that further changes to property regulation and taxation may have been shelved for the time being.
Hopefully, we’ll see more clarification from the government on its long-term changes to the property market in future budget announcements.
It’s important to take a broad view of the market, and although this budget might not have focused on property as much as it would have done prior to the emergence of Covid-19, it’s encouraging to see steps being taken towards helping reinvigorate property after years of stagnation.
