The Government has finally announced how an extra Stamp Duty surcharge on foreign investors would work.
The idea was first proposed by Prime Minister Theresa May at the Conservative Party conference last October and then mentioned in the Budget later that month, but a consultation has only just been released.
The charge would add an extra 1% to the existing rates for both standard and additional residential purchases in England and Northern Ireland.
It would apply to non-UK residents, which the consultation defines as anyone who has spent fewer than 183 days in any part of the UK – including Scotland and Wales – in the 12 months prior to the transaction completing.
Overseas buyers will be able to apply for a refund if they spend 183 days or more in the UK in the 12 months following day of transaction.
The charge will also apply to companies based overseas as well as UK limited companies under the direct or indirect control of one or more non-UK resident persons.
It will also apply to joint purchases where at least one party is a non-UK resident.
The Government said it is considering exemptions for those who work for the Crown, Armed Forces or Civil Service to support those based overseas.
Additionally, first-time buyers who are non-UK residents will still get to use some of the Stamp Duty relief up to £300,000, but will have to pay 1%.
The consultation said: “The Government believes that introducing an Stamp Duty surcharge of 1% on non-UK resident purchasers of residential property in England and Northern Ireland will help to control house price inflation, thereby assisting residents in getting on to the housing ladder in line with the Government’s wider objectives on home ownership.”
Mel Stride, financial secretary to the Treasury, said: “The UK is and will remain an open and dynamic economy, but some evidence shows that non-UK resident buyers of UK property could be inflating house prices.
“A 1% surcharge could help more people own their own homes in the future, and its proceeds will go towards tackling rough sleeping, boosting our plan to halve the numbers of rough sleepers by 2022.”
The consultation closes on May 6.