Britain's Labour Party to increase surcharge for foreign property buyers

Stamp duty rise will help Britain's young buy homes, shadow chancellor Rachel Reeves says

Shadow chancellor Rachel Reeves delivers a speech on day two of the Labour Party conference. Getty Images

The UK's opposition Labour Party would increase the surcharge on property purchases for foreign buyers in an effort to fund increased building of homes should the party win the national election widely expected to happen next year.

“It is time we built the homes our young people need. We will raise the stamp duty surcharge on overseas buyers to get Britain building,” shadow chancellor Rachel Reeves told the Labour Party's annual conference in Liverpool on Monday.

An extra surcharge of 2 per cent for foreign buyers was introduced in April 2021 and is applied regardless of the type of non-resident buyer, be they individual or business.

The addition surcharge is on top of the existing 3 per cent stamp duty surcharge on purchases of second homes or buy-to-let properties and the existing stamp duty rates for UK home buyers, which is an increasing scale that begins after £250,000 ($305,000).

For example, at the moment, a non-resident buying a house in the UK for £2 million, could expect to pay £191,250, or 9.6 per cent of the purchase price, in stamp duty.

Ms Reeves also announced that a Labour government would adjust the tax status of non-domiciled residents, by removing the "non-dom" taxpayer category, which currently means some people enjoy foreign earnings free of tax for up to 15 years.

"I'm not going to make any uncosted and unfunded spending commitments," she said.

"I've said that we'll tax the non-doms properly, that we will put that money into our NHS."

Taxing non-doms "properly" could raise more than £3.2 billion ($3.90 billion) in tax each year, according to research published last year by the University of Warwick and the London School of Economics.

'Iron-clad rules'

Ms Reeves pledged that a Labour government will have a sounder and tighter grip on the UK's national finances than has been the case under the ruling Conservatives. She added that Labour would work with business to get the country's “future back”.

“A Labour government will not waver from iron-clad fiscal rules. nor play the Tory game of undermining our economic institutions,” Ms Reeves said.

“The last Labour government granted operational independence to the Bank of England.

“I started my career as an economist at the bank and I saw the lasting contribution that that made to Britain's economic success.

“So, we will protect the independence of the bank, the Office for Budget Responsibility and our civil service. And, as chancellor, I will put forward a new charter for budget responsibility, a new fiscal lock guaranteeing in law that any government making permanent and significant tax and spending changes will be subject to an independent forecast from the Office for Budget Responsibility.”

'Serious economist'

In what was viewed a surprising move, former Bank of England governor Mark Carney praised Ms Reeves as a “serious economist” who understood the big picture.

“It is beyond time we put her energy and ideas into action,” he said in a video message played to the party conference delegates following her speech.

Ms Reeves also promised to improve the “antiquated planning system” by implementing a “once in a generation set of reforms to fast track battery factories, life sciences and 5G infrastructure”.

She also announced Labour's plans to “rewire Britain”.

“Securing the supply chain we need for lower bills and to build faster and cheaper, opening up new grid connections to competitive tendering.

“And because the British people should own a stake in their energy system, the publicly owned Great British Energy will look to bid into that competition, 220,000 new jobs, lower bills for good and energy security for Britain.”