How the other half make money - huge tax perks for overseas investors

An international consultancy specialising in investors’ residency and citizenship has lifted the lid on the huge tax savings open to overseas property buyers.

Astons says many overseas buyers are purchasing UK property in bulk - meaning they not only take advantage of the current stamp duty holiday at the moment, but can also get ahead of the additional two per cent SDLT surcharge for foreign purchasers coming into effect in April 2021.

They are now “essentially securing a double stamp duty saving” says Astons.

The firm says that by purchasing six or more residential units in one transaction, these buyers are able to secure non-residential stamp duty rates starting at just two per cent from £150,001 to £250,000 and five per cent above the £250,000 threshold. 

One such example Astons recently oversaw was a six-unit purchase in London from a Hong Kong based buyer with a sold price of £6.988m. 

Due to regional instabilities and the ability to apply for British citizenship from January, the buyer opted to invest in the London market; the purchase of six residential properties was an investment and to act as accommodation for his staff.

Astons says that had the buyer opted for the traditional residential path to purchase he would have paid £946,991 in stamp duty at present, a considerable saving of £338,914 compared to purchasing post-April 2021 with the additional two per cent surcharge. 

However, purchasing these six units as a non-residential investment resulted in a stamp duty tax bill of just £338,914, some £608,077 less than the current residential rate and £762,842 lower than the residential rate with the incoming additional two per cent.

Arthur Sarkisian, who is a director of Astons, says: “A whole host of global influences are spurring foreign interest in the UK property market at present. While the residential stamp duty holiday has helped boost this interest, we’re now seeing many invest above and beyond a family home to lay far stronger foundations for their personal and professional future in the UK.

“By ‘bulk buying’ in the residential market, they are able to secure a far lower rate of stamp duty and with the weaker pound, investing now is making very good business sense. While the residential rush from foreign buyers will no doubt dissipate come April, we expect this higher level of investment will continue as many lay future foundations in anticipation for life after Covid.”

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