The latest research from Benham and Reeves has revealed where foreign buyers can get on the ladder now with the most significant discount combination of a double stamp duty saving and a reduction in property prices.
The current stamp duty holiday means that foreign buyers are currently able to save £14,573 on the average London property purchase. However, with government plans to introduce an additional 2% surcharge for foreign buyers as of April next year, the cost of stamp duty is set to skyrocket to £38,579.
For foreign buyers making their move now, this means an additional £24,006 saved in Stamp Duty Land Tax in addition to the sum already wiped off by the stamp duty holiday.
The Royal Borough of Kensington and Chelsea offers the most significant additional saving for foreign buyers transacting at the moment. With the current holiday in place, the cost of stamp duty on a current purchase has reduced from £125,243 to £110,243; a saving of £15,000.
Come April 2021, this stamp duty requirement will climb to £153,165 with the additional foreign buyer surcharge. So international buyers transacting before this are saving a further £42,922 in addition to the £15,000 saved due to the stamp duty holiday.
Similarly, foreign buyers looking to buy in Westminster can save themselves £36,699 by transacting now when considering the current reduced level of stamp duty compared to the cost including the additional surcharge in April 2021. Camden (£32,621), Hammersmith and Fulham (£29,943) and Hackney (£27,773) also offer some of the best stamp duty savings between the current level and the foreign buyer surcharge coming next April.
However, there are two other areas offering better value for foreign buyers at present. In the last year, house prices in the City of London have fallen by £60,868. When combining this reduced cost of investing with the £30,851 stamp duty saving made by buying now, foreign buyers are some £91,720 better off investing in the London property market at present.
In Brent, a £28,463 reduction in property prices coupled with a £21,287 stamp duty saving means that foreign buyers are £49,750 better off buying now.
Richmond has also seen property prices decline by £12,875 in the last year. With the addition of a stamp duty saving of £27,670 ahead of April’s surcharge, foreign buyers are £40,545 better off as a result of buying now. Marginally lower than the overall stamp duty saving in Kensington and Chelsea but a notable saving, none the less.
The London Boroughs of Ealing, Bromley, Southwark, Enfield, Croydon, Havering and Bexley have also seen the current stamp duty saving on offer to foreign buyers bolstered by a reduction in property values in the last year.
Director of Benham and Reeves, Marc von Grundherr, commented:
“The recently implemented stamp duty holiday has not only rejuvenated domestic buyer demand, but we’re also seeing foreign buyers starting to return to the capital in their numbers. In fact, the vast majority of our buyer interest coming from Asia has only been concerned with homes falling under the £500,000 threshold.
This has been intensified due to the sour taste of a two per cent stamp duty surcharge on the horizon as the government continues to dampen what is a vital sector of the London property market.
In any case, the stamp duty savings currently on offer have been heavily bolstered by the additional saving made in comparison to buying from April next year and this has caused an immediate uplift in buyer demand from foreign shores. Great news for developers who with stock currently, or due to hit the market in the coming months.
What’s more, some boroughs have seen property prices reduce over the last year and so foreign buyers are not only able to save considerably where stamp duty is concerned, but they’re securing even better value in terms of the price of the property itself.
London remains the pinnacle of homeownership for many foreign buyers, and while a ramped-up level of stamp duty will be hard to swallow, it certainly won’t deter buyers in London’s high-end market. However, with many rushing to make the most of the savings currently on offer, any negative price trends that have plagued the capital in the last 12 months are sure to be short-lived as demand starts to outweigh supply.”
|Table shows stamp duty cost by borough previous to the stamp duty holiday, current amount owed, the amount owed due to the 2% foreign buyer surcharge from April 2021 and the difference between the current amount owed and the amount owed with the 2% foreign buyer surcharge.|
|Location||Additional Property Stamp Duty Owed Pre-Holiday||Additional Property Stamp Duty Owed Post-Holiday||Additional Property Stamp Duty Owed from April 2021||Difference between SDLT paid now with SDLT holiday and after April 2021 with 2% surcharge|
|Barking and Dagenham||£16,171||£9,814||£22,713||£12,899|
|City of London||£53,407||£38,407||£69,258||£30,851|
|Hammersmith and Fulham||£49,774||£34,774||£64,717||£29,943|
|Kensington and Chelsea||£125,243||£110,243||£153,165||£42,922|
|Kingston upon Thames||£30,480||£15,480||£40,600||£25,120|
|Richmond upon Thames||£40,678||£25,678||£53,348||£27,670|
|Location||Average House Price (March 2019)||Average House Price (March 2020)||Change (£)||Stamp Duty Saving (Now vs April 2021 2% Surcharge)|
|City of London||£853,451||£792,583||-£60,868||£30,851|
|Kensington and Chelsea||£1,218,617||£1,396,102||£177,486||£42,922|
|Richmond upon Thames||£646,356||£633,481||-£12,875||£27,670|
|Hammersmith and Fulham||£716,606||£747,174||£30,568||£29,943|
|Kingston upon Thames||£474,572||£506,000||£31,427||£25,120|
|Barking and Dagenham||£294,065||£327,136||£33,071||£12,899|
View all posts by Benham & Reeves