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Tax

Stamp Duty Cuts In the UK

How stamp duty cuts affect Hong Kong buyers

When buying property in the UK, you are required to pay the Stamp Duty Land Tax. The Stamp Duty Land Tax applies to properties bought outright or with a mortgage, as well as residential and commercial properties. Before her resignation, Liz Truss and Kwasi Kwarteng announced a stamp duty cut as part of their mini-budget.  

Prior to the stamp duty cut, the threshold of how much property has to cost before paying stamp duty was £125,000. The stamp duty cut has raised this threshold to £250,000. New measures have also been introduced. Investors buying UK property worth £425,000 for the first time will not be paying stamp duty. In addition, first-time buyers buying property up to £625,000 can claim stamp duty relief.

In the recent past, there has been economic and political turmoil that has led to a severe undersupply of housing, especially for UK residents. As a result, house prices have increased, and the number of UK residents who can comfortably afford mortgages continues to dwindle.

What does this mean for Hong Kong Investors?

Although Hong Kong is cutting stamp duty taxes, the stamp duty cut will most likely favour foreign investors in Hong Kong. Permanent residents in Hong Kong who are buying their first property as a primary residence are exempted from extra and higher taxes. However, they must pay the base stamp duty, which varies depending on the property's value. This means that permanent residents buying either their first or second property are eligible for a stamp duty tax ranging from HK$100 to 15% of the property value.

In comparison, Hong Kong investors buying property in the UK will pay an extra 2% surcharge, but with the current exchange rates, the discount outweighs the additional taxation. With adept implementation, the stamp duty cut in the UK will allow more people to move homes, and property investors will get a better chance to acquire property in the UK. In fact, if the cut remains permanent, more balanced conditions will return to the UK property market.

The UK government hopes to increase the ability of UK citizens to own property locally, but the measures applied and the current economic status in the UK and overseas are boosting foreign investment in the UK. Truss’ announcement also revealed plans for more space for properties to be built. As more property emerges in the UK property market, Hong Kong investors can take advantage of the new economic policies and the friendly exchange rates to be first in line for prime UK property.  

The UK property market is ripe for Hong Kong investors. Forecasts predict that house prices will slowly increase, so it is best to buy UK property now.

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Pitchbook Property Limited and its sales representatives exclusively engage in the sale and promotion of properties situated outside Hong Kong. In accordance with the Estate Agents (Exemption from Licensing) Order (Cap. 511B), we are exempt from obtaining an estate agent’s licence to deal with such properties. We carry on the business of doing estate agency work exclusively in relation to properties outside Hong Kong and are not licensed to deal with any property situated in Hong Kong. All information, figures, and materials provided herein are for reference purposes only and are correct at the time of production but may be subject to change without prior notice. While we endeavour to ensure the accuracy of the information, we cannot guarantee its legitimacy and will not accept any liability for any loss or damage incurred as a result of its use. Purchasers should note that purchasing properties located outside Hong Kong involves risks, including but not limited to changes in market conditions, currency fluctuations, taxes, and legal requirements in the country where the property is located. You are strongly advised to carefully review all relevant information, terms, and conditions, and to seek independent professional advice (legal, financial, or otherwise) before making any property purchase decisions. This document and all related marketing materials are not intended to constitute an offer, solicitation, or recommendation to purchase any property. Pitchbook Property Limited does not act as a legal, financial, or tax advisor in connection with any property transaction. Important Notice: This disclaimer is issued in compliance with the guidelines of the Estate Agents Authority of Hong Kong. Consumer Warning: To buy or not to buy non-local off-plan properties? Assess the risks before you buy!