While the stamp duty holiday may be extending for Britons, the same is not the case for foreign buyers, who will see the duty they owe increase by £95,000 ($131,758) as of 1 April.
The fee will go up from £378,750 to £473,750 on an initial purchase and £498,750 to £593,750 on a secondary property, Enness Global Mortgages, a mortgage broker for global-high-net-worth individual, revealed.
This also takes into account an additional 2% duty being added for non-domestic buyers.
The current holiday, which expires 31 March, did benefit foreign buyers though. Based on the average sold price for a prime property of £4m in 2020, non-UK residents saved £15,000 in stamp duty.
The duty owed on an initial purchase reduced from an average of £393,750 prior to the holiday to £378,750 from 8 July onwards, with the tax owed on a secondary purchase reducing from £513,750 to £498,750.
The report has also found that London’s high-end homebuyers paid 12% of the stamp duty owed across England in 2020, despite accounting for just 0.1% of market transactions.
Enness analysed market sold price records for transactions at £3m and above to have completed in England during 2020.
It found that across the residential property market in England, a total of £2.9bn was paid in stamp duty across 468,929 transactions.
As much as £436.4m of this was paid on transactions with a sold price of £3m or above, via 846 property sales.
The large majority of these sales were for high-end homes within the capital, with London seeing 675 properties sell for £3m and above, accounting for 80% of all prime transactions but just 0.1% of all homes sold across England.
Even with the capital’s top-tier market accounting for a minute proportion of transactions, London’s high-end homebuyers paid out a total of £368.6m in stamp duty in 2020 alone, accounting for 12% of all stamp duty paid across the country.
As with the rest of the market, the current stamp duty holiday did provide some relief with homebuyers in London’s top tier saving £4.5m in stamp duty since the holiday.
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CEO of Enness Global Mortgages, Islay Robinson, noted that “a prime London home remains one of the must-haves on any notable international property portfolio and so this increase will be viewed as a small price to pay for the serious investor.”
“Stamp duty is just one piece of the puzzle when buying a property in the UK. Any discount negotiated, the potential to add value, finance costs and currency considerations all need to be weighed up to determine the true value of a transaction. Looking at stamp duty in isolation won’t provide an accurate indicator of the additional costs incurred when buying," he added.
He noted that "those transacting at the very top-end are far better placed to stomach these costs and so a stamp duty saving hasn’t been a driving factor with regard to transacting, nor has it caused the mad panic to complete that we’ve seen across the regular market."
Last week UK chancellor Rishi Sunak extended a stamp duty holiday in England and Northern Ireland in his 2021 Budget.
The threshold for stamp duty, a tax on property transactions in England and Northern Ireland, will remain at £500,000 until 30 June for residential purchases. It means buyers avoid the levy altogether on purchases under that amount. It will then only fall to £250,000 for another three months, before returning to its standard £125,000 rate.
Sunak also used his speech to flesh out prime minister Boris Johnson's pledge to help turn "generation rent into generation buy" at the Conservatives' party conference last October. The UK government will provide a mortgage guarantee to lenders on mortgages for first-time buyers if they can only offer 5% deposits.
UK house prices were 0.1% lower in February compared to January, continuing a muted start to the year.
Data from lender Halifax showed that the average UK house price is now £251,697 ($349,000).
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