The surcharge will be paid on top of existing rates, according to prime minister Theresa May.
Foreign investors will have to pay more to buy property in the UK, the prime minister has announced.
Theresa May said the housing crisis was the biggest domestic policy challenge facing this generation.
Speaking at the Conservative Party Conference, she said overseas buyers would have to pay a higher rate of Stamp Duty on property purchases to help “level the playing field for British buyers”.
She also announced plans to lift the cap on the amount of money councils are able to borrow against their housing revenue account assets to fund new developments.
She said: “We will only fix this broken market by building more homes… We will help you get on the housing ladder and we will build the homes this country needs.”
Why is this happening?
There have long been concerns that foreign buyers are pricing UK residents out of the property market, particularly in London.
Research by the Mayor of London found that a third of new homes in some parts of London were being purchased by overseas investors.
It is hoped that imposing an additional Stamp Duty on these buyers will act as a deterrent.
But the buyers are only one half of the equation, and the other factor that is pushing property values higher is that the UK is failing to build enough homes.
Lifting the cap on the amount local authorities are able to borrow should enable them to build more properties.
Above: Flat for sale in Lillie Square, London's Earls Court
Who does it affect?
The announcement is obviously bad news for overseas buyers hoping to invest in UK property.
But while the move could help more UK residents purchase a home or trade up the ladder through reducing competition among buyers, it is likely to hurt house builders.
Enabling councils to build more homes is good news for those hoping to move into social or affordable housing, but it is likely to be sometime before the impacts of the change are felt.
What’s the background?
May did not give full details on exactly who would be impacted by the higher Stamp Duty rate, simply saying it would be charged to those who were not living in the UK and were not paying taxes.
She also did not outline what the higher Stamp Duty rate would be, but the Government is understood to be considering imposing a rate of between 1% and 3% of a property’s value.
The money raised through the additional tax, which could be between £40m and £170m, will be used to tackle the problem of rough sleeping.
Despite conceding that the UK faced a housing crisis, May appeared proud of the Government’s record in this area.
She told the conference that more than 120,000 households had benefitted from the abolition of Stamp Duty for first-time buyers on properties costing up to £300,000, while 500,000 had been helped on to the housing ladder through schemes such as Help to Buy
She added: “More new homes were added to our stock last year than in all but one of the last 30 years.”
Top 3 takeaways
- Overseas buyers will have to pay a Stamp Duty surcharge when purchasing property in the UK
- The cap on the amount of money councils are able to borrow against their housing revenue account assets to fund new developments is being abolished
- Theresa May said the housing crisis was the biggest domestic policy challenge facing this generation