UK’s decision to lift stamp duty threshold a boon for Middle East property investors, Knight Frank says
The threshold at which people start paying the residential property tax has been quadrupled to £500,000 in a bid to stimulate the housing market
A decision by the UK government to temporarily lift the threshold on which people pay stamp duty is expected to encourage investors from the Middle East to buy property in the country, according to consultancy Knight Frank.
Buyers will now pay stamp duty, a form of property tax, only on properties worth more than £500,000 (Dh2.3 million) in the UK, which is four times the previous threshold of £125,000. The higher limit, introduced to stimulate the market in the wake of the coronavirus, will remain in place until March 31 next year.
“The announcement will provide a welcome boost to property transactions across the UK property market,” said Henry Faun, partner at Knight Frank Middle East. “Interest and activity levels from Middle Eastern parties in the UK has recently seen an upsurge and the recent SDLT (Stamp Duty Land Tax) changes will make the buying of [completed] property that much more attractive in the coming months.”
The Covid-19 pandemic has caused the global economy to slide into a recession that is expected to be the worst since the Great Depression, according to the International Monetary Fund.
The UK, the world’s sixth-largest economy, which already faced the impact of Brexit before the pandemic, is set to shrink by 10.2 per cent, a steeper decline than the previous 6.5 per cent contraction forecast in April this year, according to the fund.
UK chancellor Rishi Sunak said the government pressed ahead with the decision to lift stamp duty to stimulate more deals in the market, encourage people to move home and to support jobs, both across the UK and from global real estate investors.
“Moving house has a multiplier effect on the wider economy to the benefit of businesses of all sizes. Gulf-based clients already benefit from an attractive exchange rate, this will add an additional lift to their buying ability in the UK,” Mr Faun added.
The stamp duty announcement comes on the back of renewed activity in the UK property market as the government eases coronavirus-related restrictions.
“A large number of buyers registered their interest after an eight-week lockdown but what’s happening is bigger than that,” said Tom Bill, head of UK residential research at Knight Frank.
“Sellers are coming back in meaningful numbers and deals are being agreed at record rates. You can question how long it will last but right now the market is as robust as it has been in years.”
Updated: July 19, 2020 02:03 PM