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Prime Minister Theresa May announced at an otherwise rather uninspiring Conservative party conference last week that foreign investors will have to pay an additional 1% stamp duty when they purchase properties in the UK. At present, they pay the same stamp duty rates as UK-based investors. Given the strength of the UK property market’s appeal to international investors, however, the additional 1% tax is not likely to ruffle too many feathers, outside of prime central London.
“The UK’s regional property markets offer such exceptional value for money, particularly since sterling’s dip in value following the Brexit referendum, that an additional 1% tax is unlikely to deter foreign investors. Those buying with dollars or euros, or indeed any currency pegged to those, can pick up some real bargains in regional cities around the UK, particularly in the Mid-lands and further north.”
While London’s over-valued property market may suffer slightly, cities in the Northern Power-house are likely to continue attracting high numbers of foreign investors thanks to their stable property markets and low entry points. Newcastle, for example, has an average property price of just £129,600, according to Hometrack’s UK Cities House Price Index. In Liverpool, which is currently enjoying the fastest year on year property price inflation in the UK, the average is £120,100, meaning that foreign investors will have to pay just 1% stamp duty if it is their first UK property purchase. With prices rising by 7.5% in the past year in Liverpool, it would take a little under two months of ownership before the additional stamp duty tax had been covered by the increase in the property’s value.
The Northern Powerhouse cities are flourishing in areas other than their property markets, too. The Manchester-Liverpool metropolitan area has just been awarded a top ten spot on IBM’s list of global investment destinations. Meanwhile, visitor numbers across the Northern Power-house region have shot up by around 5% over the past year. Visitor numbers in the North East have jumped the most, up by 17% as cities such as Newcastle draw in travellers from within the UK and overseas.
“What we’re seeing is a significant uptick in interest in cities outside of London and Birmingham (though the latter also has plenty of its own success stories to tell of late). Manchester, Liverpool and Newcastle are increasingly coming to the fore, whether as locations for tourists to visit or as places for foreign investors to pick up great value properties. A 1% hike in stamp duty is not going to do much to change that.”
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