The Great Stamp Duty Dilemma – Is It Worth Paying The Extra 3% Tax For UK Property?

During the UK’s election in 2019, Boris Johnson promised to impose a new 3% tax on property purchases by foreign buyers.

It was a shrewd maneuver to appease the local voters, who had to suffer through massive drops in their property values due to the chaos caused by Brexit and the political uncertainty.

To rub salt in the wound, foreign buyers had been taking advantage of the situation, by snapping up UK property on the cheap.

Previously, local and foreign buyers pay the same amount of tax.

From 11 March 2020 onwards, foreign buyers will have to fork out an additional 3% tax on UK property.

Certainly no small sum considering the 6-7 figure numbers associated with a property purchase!

In the recent months, this announcement had triggered a buying frenzy among foreigners looking to avoid the extra tax hit.

However, with the 11 March deadline looming, one obvious question has emerged: Is buying a UK property still a viable investment?

Read on to find out your answer!

The Major Changes In The UK Property Market Following The 3% Tax Hit


Boris Johnson’s Conservative Party estimated that this new rule would affect up to 70,000 transactions per year, and bring in an extra £120million in revenue – much needed funds that would be used to improve living conditions in the UK.

They also cited academic research that suggested rampant overseas purchases were driving up house prices, resulting in many local buyers being left frustrated with the sky-high costs involved in owning a home.

In other words, this 3% tax is a cooling measure meant to deter mass purchases from foreigners, and give the locals an advantage in the property market.

Most of you reading this are probably under the foreign buyer category. Which means that this new tax hit will be “bad news” for you.

Or is it really?

Sure, no one likes to pay more. 3% easily translates to a minimal 5-figure amount in most cases.

In our opinion though, it’s actually not that bad. There are some “hidden benefits” for foreign buyers, if you look beyond the surface.

For one, this will clear up the market and cause many foreign buyers to stay away from UK property.

This is good news as competition for high gain properties will be lesser, allowing for more options to cherry-pick the ideal UK home of your choice.

Secondly, the regeneration in many areas of the UK is likely to drive prices up for selected properties, especially when this process is complete within a few years.

In the grand scheme of things, the UK’s regeneration will more than make up for the additional 3% tax.

So does it really matter if foreign buyers are paying more now, if the ROI is still profitable in the future?

How To Invest In The Right Property After The 3% Tax Implementation


One thing is clear: More care and caution will have to be taken after 11 March 2020.

Buy the wrong UK property, and it could lead to an expensive 5-figure mistake.

Buy the right one however, and opportunities for good returns will be very much up for grabs.

Tax or no tax, the fundamentals of property investment still apply. Do thorough research, select the right property with minimal risk + high potential appreciation, and it’ll still be a worthwhile purchase.

So don’t panic buy. Don’t shun the UK. Don’t wait and see.

This 3% tax is here to stay. Work around it. It’s just an extra number to add into the research process.

Focus on what’s really important (the fundamentals), and you can still secure an under-valued UK property with room for growth.

Got any questions about how exactly you can do that?

Fill in your details and queries below. We’ll be more than happy to share our extensive knowledge on the UK property market with you!

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