Residential Research
Stamp Duty Surcharge: Is London Still Competitive for Property Investors
Find out how London currently compares to other global cities for domestic and international investors.
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London is a global city
London's residential market has always been popular with investors. It is a city steeped in history, one of the world’s major business centres and is widely viewed as a safe haven.
Its access to world-class education and multicultural neighbourhoods makes the city a favourable destination for families relocating or those buying homes for children attending the city’s universities.
The global demand for London’s homes means any changes to property taxation can potentially have a big impact on demand and dictate whether overseas buyers invest in the city.
SDLT (Stamp Duty Land Tax) is paid on all property purchases in the UK, and an additional 2% surcharge on second homes was introduced in the Autumn 2024 Budget. This took the overall surcharge from 3% to 5% making it more expensive for investors to buy homes in London.
Considering this, we have analysed the cost of buying and selling property for both domestic and overseas investors (taking the projected capital value growth over a five-year period into account) against some of London’s global competitors.
London remains competitive
Despite the additional stamp duty surcharge for overseas buyers, London remains globally competitive. After the introduction of the additional surcharge, the total cost of buying a second home in London worth £500,000 was £68,000, or 14% of the property’s value, an increase of £10,000.
However, except for Paris, the cost of buying a second home in London remains among the lowest. In particular, it is still considerably cheaper than the likes of Singapore, Tokyo and New York, where total costs exceed £100,000. The UK is also not alone when it comes to recent changes to costs for overseas property buyers.
Since the 1st January 2025, foreign residents in Australia have faced higher Foreign Resident Capital Gains Withholding tax, at a rate of 15% on all properties. This is an update from the previous policy of 12.5% on properties valued at AU$750,000 or more. More recently, Spain’s Prime Minister has proposed a tax for non-EU citizens purchasing Spanish properties of 100% of the property value. Finally, Canada introduced a blanket ban on non-Canadians to purchase residential property in January 2023. This had been initially due to end at the start of 2025 but has since been extended to 2027.
In comparison, the additional surcharge in the UK is comparatively muted and shows the relative ‘openness’ to foreign investment. As a result, London will remain an attractive investment destination for overseas buyers, particularly given the strong fundamentals of London’s property market.
Stamp Duty FAQ's
What is Stamp Duty land tax?
You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property price when you buy residential property, for example, a house or flat.Up until March 31st Stamp Duty Tax only applies to properties over £250,000, but after April 1st the price threshold will decrease to £125,000. Visit the government’s website for more information on stamp duty returns.
Stamp Duty land tax rates for additional home purchasers
SDLT on residential property transactions is charged using a separate rate of tax on each portion of the purchase price.Following last year’s budget, purchasers of additional homes will see an extra 5% surcharge on top of the standard rates, up from 3%. Overseas purchasers have to pay an additional 2% surcharge on top of this.
As of 1st April 2025, the stamp duty rates for domestic and international investors are:
| Proportion of property value | UK Investor | Overseas Investor |
|---|---|---|
| Up to £250,000 | 5% | 7% |
| £250,001 - £925,000 | 10% | 12% |
| £925,001 - £1.5m | 15% | 17% |
| Over £1.5m | 17% | 19% |
Learn more about the full breakdown of rates.
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