Research released today by Knight Frank reveals that now is an opportune time to purchase property in the UK as international buyers will have a complex set of considerations to assess towards the end of 2020, including a future stamp duty hike.

From April 2021, overseas buyers will pay a 2% surcharge on residential transactions. Its introduction follows the end of the stamp duty holiday introduced in July that lifted the tax-free rate to £500,000.

Liam Bailey, Global Head of Research at Knight Frank says, “Transacting before 1 April will save money for overseas buyers. For a £1 million transaction, the combined saving from not paying the 2% surcharge and benefitting from the current stamp duty holiday is £35,000. For a £5 million property, the equivalent sum is £115,000, while the saving exceeds £1 million for a £50 million transaction.

The message here is that the window of opportunity is closing. For international buyers looking to take advantage of the current stamp duty saving and transact before the 2% surcharge comes into place – now is good time to do it. Homes are selling fast and services are backed up – delaying the moving process. Those contemplating a purchase may think there is plenty of time left to take advantage of these savings but the truth it, now is the time to commit.”

Mei Han Wong, Executive Director, Head of International Residential Sales, Knight Frank Hong Kong says, "The next 6 months is a crucial period for overseas buyers looking to buy in the UK by taking advantage of the favourable conditions ahead of the end of stamp duty holiday and an additional 2% stamp duty surcharge planned for April 2021. In addition to that, the current weak pound means that overseas investors are buying at a discount in the UK property market. We have received 30% more inquiries from potential buyers compared to the beginning of this year and we expect more people will invest in consideration of wealth diversity, kids' education and emigration reasons."

Demand may improve among international buyers in coming months but there are multiple moving parts to evaluate.

First, travel restrictions will, at some point, be relaxed. The situation remains fragile but airline stocks have risen by a quarter since the start of August according to MSCI, as traffic picks up from a low base.

Another part of the equation is currency. As Brexit negotiations continue, the pound will remain volatile throughout 2020. However, if pragmatism prevails, as it did last year, the pound will ultimately strengthen.

Meanwhile, the US elections make the trajectory of the dollar particularly difficult to assess. Ultimately, if the Covid-19 pandemic is brought under control and the Federal Reserve relaxes its approach to QE, the dollar could strengthen as its safe haven credentials are reaffirmed.

Transacting before 1 April will therefore save money for overseas buyers, as the chart below shows: