The chancellor, Rishi Sunak, has confirmed the introduction of a 2% stamp duty surcharge for foreign property buyers to take effect from April 2021.

(Stamp Duty is levied when buying a property valued at more than £125,000 or more than £40,000 for second homes.)

Drawing mixed reactions, the chief executive of real estate consultant Ludgrove Property, Fraser Slater, who was most critical of the change, said that: “Johnson, Raab and Javid all pointed to a stamp duty cut in their leadership campaigns but sadly political point scoring was more important.”

He however foresees that the announcement will raise the number of property purchases by non-UK buyers before the new ruling would take effect in the coming year.

“No doubt there will be an uptick in purchases by overseas buyers ahead of the introduction of the tax in April 2021.”

Mr. Slater however warns that if no changes to the underlying rates were undertaken, “global talent will be looking elsewhere for a home. ”

Dismayed by the new turn of events, Jason Rishover, chief executive of developer Heronslea Group, stated that: “We were disappointed that, yet again, stamp duty was not addressed, other than the new surcharge of 2% for non-residents, as it remains a thorn in the housing market’s side and needs a complete overhaul.”

Echoing the same sentiment, Janet Armstrong-Fox, partner and head of private client property at law firm Collyer Bristow LLP, points out that: “Any overseas buyer will almost certainly already be paying the extra 3% SDLT that the purchase of any second home attracts, so the additional 2% as an overseas buyer will be a further disincentive to invest here.”

And just like Fraser Slater, Ms. Armstrong-Fox warns that: “After a short-term flurry of activity before April 2021, the 2% overseas buyer surcharge will have a detrimental effect on the London property market in particular with the knock-on effect of deterring overseas interest in the UK at a time when the UK needs to be seen as very much open to the world for investment and trade.”

Clearly, these people see the 2% stamp duty surcharge to foreign buyers as a deterrent for future property investments in the country and might in the long run affect future pricing and the economy in general.

However, Greg O’Reilly, vice president – senior analyst at Moody’s is seeing a different picture. According to O’Reilly, “The 2% stamp duty surcharge on overseas borrowers, to be applied from next year, is credit positive in the long term for UK buy-to-let RMBS because it will reduce the supply of new properties in big city areas that are typically used for buy-to-let, thereby supporting rents.

“Foreign buyers make up a disproportionate contribution to new-builds, and tend to concentrate purchases on flats in city centres. Supply of new builds will decline because funds from overseas investors will fall.”

For Patrick Alvardo, director of Knightsbridge estate agency Nicolas Van Patrick, he thinks foreign buyers will be able to accept the added cost.

“Many foreign buyers purchasing in other currencies will be able to absorb this extra 2% within the foreign exchange currency trade and still benefit from the downward correction in prices since the peak back in 2014.

“We still feel that London property compared to other global cities looks fair value and those buyers wanting to proceed can still do so before the 2% surcharge comes into effect in April 2021.”

A September 2019 blog for the British Property Federation came up with three radically different proposals for stamp duty:

* Net Stamp Duty - The Stamp Duty Land Tax (SDLT) would only be charged on the difference between current value of property and new value of property. According to the article, “It would encourage liquidity. It would free up more cash at the point of purchase for improvements and refurbishments. It would allow the workforce to be more flexible and switch between locations. No SDLT would be payable on people downsizing...”

* Allow Stamp Duty to be paid over time - “It could be linked to tax codes, and so included in PAYE and therefore would not need a separate collection mechanism to be monitored. SDLT paid, however, is not an issue for the majority of buyers as the SDLT can be rolled up as part of a mortgage, providing there is sufficient equity to pass affordability tests.”

* A Lifetime Allowance - The blog admits this could be complex and may penalise those who are obliged to move home often, but “this would support first time buyers and second steppers.”

However, elections have come and gone and promises for reforms in order to gain credence and votes are left unaddressed.