With the stamp duty holiday in place, there is significant demand for housing across the capital. The stamp duty threshold has more impact for buyers in London, and this has encouraged notable activity in the local area.
However, there are also reasons why overseas investors are paying more interest to the London market. The stamp duty holiday is open to all buyers, but from April next year, there will be a further charge on overseas investors, which will lead to them paying more when buying property in the UK.
Therefore, it makes sense for overseas investors to buy sooner rather than later, as the following information suggests.
As of September 2020, Zoopla states the average price paid for property in Eltham (in the last 12 months) stands at £452,580. With the stamp duty holiday in place, a property buyer at this price will not pay any stamp duty.
However, when the stamp duty holiday is over, the buyer will pay £12,629 in stamp duty charges. And, when the stamp duty holiday is over, the 2% surcharge for foreign buyers will also be in place. At the average price of property in Eltham this will add more than £9,000 to the overall cost of buying a home.
Therefore, a foreign investor buying at the average price of Eltham property before the stamp duty holiday closes has to pay no additional fees when buying property. The same investor, at the same property price, buying after the stamp duty holiday closes and the surcharge is in place, will have to pay over £21,000.
In Canary Wharf, the average price paid for property stands at £523,364. Right now, the stamp duty payable at this price is just over £1,168. When the stamp duty holiday is over, a buyer will need to pay over £16,168.
Then there is the 2% surcharge payable by overseas investors which would add up to more than £10,000. Therefore, an overseas investor would be looking at paying less than £2,000 in additional fees if they purchase before the end of March 2021 but paying more than £26,000 if they purchase from next April.
If you own property in London, and you plan on selling soon, we can help. We will provide you with a property valuation. This valuation is the key starting point when it comes to selling your home.
Marc von Grundherr, a known name in the UK property sector, said; “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.”
We know these are challenging times for the property market. At Love Your Home, we are keen to maintain a high standard of service for all our clients. As well as helping people now, we will review the changes likely to occur in the market. If you are looking to stay informed, rely on Love Your Home.