Hongkongers face April 1 countdown on UK property tax as housing market sees powerful rebound

While a surcharge on foreign purchases will kick in on April 1, buyers can still take advantage of certain stamp duty extension until June 30, JLL estimates

Average UK house price rose in December by the most since October 2014 to the highest on record, official statistics show

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People sit in the sunshine beside the River Thames in London on July 3, 2020. Photo: AFP

Published: 7:30am, 17 Mar 2021Updated: 7:56am, 17 Mar 2021

Hongkongers hoping to buy UK residential property are facing a double headache regarding investment costs in the coming days: as a new surcharge comes into effect, while sustained demand has pushed house prices to new highs.

The UK government will proceed to impose a new 2 per cent surcharge on foreigners acquiring property in England and Northern Ireland as planned on April 1. Even so, stamp duty that was cut to zero in July on some houses, will be extended to June 30. This adds urgency for Hongkongers to seize on as they seek to emigrate from the city amid a clampdown on political dissent.

At the same time, UK home prices have risen to new heights – worsening affordability among locals – amid a big push in vaccination programme.

“Those who are keen to buy must complete the purchase sooner to take advantage of various incentives, as well as more attractive price points,” said Carol Li, business director at Asia Bankers Club, which focuses on marketing overseas property to bankers. “Demand will remain strong as the UK rolls out one of the world’s fastest vaccination programmes.”

The new levy could cost foreigners a cool £95,000 (US$132,000), based on an average home price of £4 million each, according to mortgage broker Enness Global Mortgages. That would work out to £473,750 on a maiden purchase, and to £593,750 on the second home ownership.