UK Prime Minister Rishi Sunak has announced that the next general election will be held on 4th July, and depending on who wins there could be changes in store for overseas investors.
After much speculation, the announcement that the general election would be held at the start of July has come as a surprise for many. It means the race is now on for MPs to begin campaigning across the UK’s 650 constituencies, while party leaders push their national campaigns.
Polls, bookmakers and most Westminster insiders believe Labour is on course to win the majority on 4th July and take over from the Conservatives, who have been in power since 2010. However, there is still time for this to change course, as polls can of course get it wrong.
Many overseas investors – or prospective ones – will be keeping a close eye on the action, as the outcome could play a significant role in what they decide to do. One reason for this is because the various political parties have different ideas on taxation, as well as on where they stand on overseas investors buying UK property.
Stamp duty for overseas investors
In the UK, every property purchase over a certain price (currently £250,000) incurs a stamp duty land tax charge. Above the £250,000 threshold, the amount of stamp duty you pay depends on the value of the property, as well as whether it is your primary residence, and whether you are buying from overseas.
Since 2021, overseas investors in UK residential property have had to pay an additional stamp duty surcharge of 2%. This was brought in by the Conservative government in order to curb house price inflation, particularly in London which attracts the highest volume of foreign investors.
The idea was to help make property more affordable for UK homeowners, and the government pledged that it would spend the extra tax yield on alleviating homelessness.
What could change?
While the Conservative party have not indicated any specific changes linked to this additional stamp duty charge for foreign investors, there have been debates over whether to scrap the tax altogether, or to only charge it to overseas investors and second homebuyers.
However, the Labour party have previously stated that they intend to increase the stamp duty surcharge for those buying UK property from abroad. However, it has not stated how much it could raise it by.
Overseas buyers keeping a close eye on UK politics could therefore look to complete their property purchases ahead of the 4th July election date, in order to potentially benefit from the current rate of stamp duty should Labour win the vote and press ahead with their plans.
Foreign buyers still keen on UK property
In a recent article by Mark Alexander of Property118, he set out a number of points that uniquely attracts buyers from overseas to the UK housing market – while figures show there are still high levels of buyers, particularly from places such as Hong Kong and the Middle East, that continue to invest in the UK.
In recent years, currency fluctuations have been a key driver behind attracting overseas investors to the market. The pound has dipped against the dollar, meaning a cheaper price for those buying via dollar-pegged currencies.
Aside from this, the UK housing market has proven to be exceptionally resilient throughout the crises of recent years. From Brexit to Covid to the cost of living crisis and current high interest rates, despite predictions of a crash from some, property prices have remained stable and are once again moving upwards.
Mark Alexander refers to the UK property market as a “gateway to a secure future”, adding: “For foreign investors seeking a stable, transparent, and potentially lucrative property market, the UK remains a compelling choice.
“With its strong legal framework, global appeal, consistent growth track record, and robust rental market, the UK offers a compelling combination of security and potential profitability.”