UK Budget 2020. What does this mean for foreign investors?
Chancellor Rishi Sunak announced the first UK Budget on 11th March. Here’s the key highlights landlords will be interested to know about:
- a 2 per cent Stamp Duty surcharge on landlords not based in Britain
- a new fund to support the improvement of roads and infrastructure in cities
- £400 million for the development of homes on brownfield sites
Stamp Duty increase for overseas home buyers
In the Budget overseas landlords will face a hike in Stamp Duty. The surcharge will be set at 2 per cent and will come into play in 2021.
Due to exchange rates, overseas landlords have been able to buy more property for their money in recent years.
As such, it has been an attractive – and financially rewarding – exercise for them to invest their money in British property.
Mary-Anne Bowring, of property consultancy group Ringley, explained: “The falling pound has made housing more affordable to overseas buyers, while domestic buyers have had to contend with stagnant wage growth and ultra-low interest rates pushing up prices and eating away at their ability to save.”
However, the increase in Stamp Duty is lower than expected, with most forecasters originally estimating that it would be set at 3 per cent.
Rachael Griffin, of wealth management group Quilter, said: “This represents a crowd pleasing policy which will win over people worried that foreign house buyers are hoovering up UK property as an investment, only to leave it empty, which further exacerbates the housing crisis gripping the nation.”
Money to improve roads and infrastructure in cities
A fund to transform cities was also announced in the Budget, allocating £1billion to a range of schemes in the coming two to three years.
These are aimed at boosting areas, such as Bournemouth, Christchurch and Poole, which will see £79 million for new cycle freeways and bus infrastructure.
These areas will become more desirable to live in as a result of the improvements, helping to boost the appeal of rental properties owned by private landlords.
More homes on brownfield sites
The Budget also announced funds to help build more homes. In particular, it allocated £400 million for the development of brownfield sites.
These are homes that landlords may consider adding to their portfolios.
Lee Pickett, of legal firm DWF, said: “The government has indicated a willingness to invest heavily in housing and the infrastructure required to unlock housing development.”
However, Clive Docwra, of construction agency McBains, said: “We would have liked to see the Chancellor go further than announcing a £400 million brownfield fund to support the development of new homes. A review of the greenbelt would have been a bolder step.”