On 29 September, Theresa May announced proposals to increase, by between 1% and 3%, the rates of SDLT payable by foreign buyers of English residential property.
It is not yet clear when this new surcharge will take effect. One possibility is Budget day – 29 October – although it is possible that only a consultation will be issued at that stage, with the surcharge becoming effective at a later date.
Clearly, if a foreign buyer is part way through negotiations to purchase residential property in England, then the only way of being absolutely sure of avoiding the surcharge will be for the matter to complete or substantially perform before Budget Day. Although SDLT increases announced at a Budget normally include protection for contracts already exchanged, it cannot be assumed that this will be available in view of the earlier announcement.
The definition of a foreign buyer for the purposes of the surcharge is, as yet, uncertain. It is likely to be based on residency. This will raise interesting questions on how the rules will apply in various scenarios such as for joint, emigrating and immigrating purchasers and purchases by UK trusts and companies ultimately owned by non-UK resident individuals.
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