The policy was announced during the 2020 Budget but formally comes into force today.
At the time HM Treasury thought the measure could affect as many as 70,000 purchases and expected to raise around £140m by the end of the 2024/25 financial year.
It means a non-resident buying a second home worth more than £1.5m could end up with a stamp duty bill amounting to 17 per cent of the purchase price.
Money raised from the non-UK resident Stamp Duty Land Tax surcharge will be used to help fund policies to reduce rough sleeping in England.
The surcharge is applied on purchases of dwellings made by non-resident purchasers, including certain UK-resident companies controlled by non-residents.
Individuals will be classed as a UK resident if they are present in the UK for at least 183 days during the period beginning 364 days before the date of transaction and ending 365 days after that date.
However, off-plan purchases and properties in the build-to-rent sector will not be excluded from the surcharge.
The surcharge was originally proposed by then-prime minister Theresa May in 2018 with the suggestion that it be at one per cent, but it was never fulfilled until it was resurrected in the Conservative’s 2019 manifesto.
Booming demand
Many within the industry believe demand for UK property from overseas buyers is set to grow despite the pandemic limiting international travel.
Last month Knight Frank said it had seen registered interest from overseas buyers in prime properties double compared to the previous month.
Speaking at The Specialist Lending Event last month Octane Capital managing director Mark Posniak also argued that international buyers would be looking positively at UK property.
And last summer data from Legal & General Mortgage Club found growing interest in the UK property market from overseas buyers, including those with a visa and non-UK residents.
