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Welcome news for Expats

The BoE also confirmed another £200bn of bond buying under the Quantitative Easing programme.

It will also be extending the term funding scheme, which encourages banks to pass on the benefits of interest rate cuts to companies and households.

A statement from the BoE reads: “At its special meeting on 19 March, the MPC judged that a further package of measures was warranted to meet its statutory objectives.

“It therefore voted unanimously to increase the Bank of England’s holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by £200bn to a total of £645bn, financed by the issuance of central bank reserves, and to reduce Bank Rate by 15 basis points to 0.1%.

“The Committee also voted unanimously that the Bank of England should enlarge the TFSME scheme, financed by the issuance of central bank reserves.” Read more

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Expats face a 2% Stamp duty hike – April 2021

The government has confirmed that expats who buy residential property in England and Northern Ireland will be hit with a new 2% stamp duty surcharge from April 1, 2021.

Chancellor Rishi Sunak confirmed the measure in his first Budget speech in the role, following much speculation about the policy over recent weeks.

Budget documents released today by the government say: “This will help to control house price inflation and to support UK residents to get onto and move up the housing ladder. 

“The money raised from the surcharge will be used to help address rough sleeping.”

Calculations published alongside the policy suggest that officials expect the measure to raise £250m to the Treasury’s coffers during 2020/21, but that the government will lose £355m in revenues the following year, possibly as a result of lower transaction numbers.

But in 2022/23 the government expects to raise £35m followed by £105m and £105m each for 2023/24 and 2024/25.

There was a mixed reaction to the policy from industry commentators.

Just Mortgages national operations director John Phillips says: “A surcharge for foreign buyers of residential property is something I have argued in favour of for a long time, so it would be churlish for me to criticise it. 

“But what is needed alongside that is a reduction in stamp duty elsewhere.

“As the Institute for Fiscal Studies has said, stamp duty is a tax on transactions, pure and simple, which freezes up the market and means people don’t get to live in homes that meet their needs.

“This Budget is being delivered in unexpected and extraordinary circumstances so it is understandable that the chancellor may not see this as a priority. 

“I hope that he will revisit the issue once Covid-19 is under control, in line with the promises previously made by the Prime Minister.”

Knight Frank head of London residential research Tom Bill says: “The introduction of a surcharge for overseas buyers will bring the UK into line with many other global property markets. 

“Attempts to ease affordability pressures in the wider housing market should be welcomed, although the new measure will need to be monitored carefully to ensure there are no unintended consequences, including for the forward-funding of new-build developments. 

“Furthermore, a wider re-think of stamp duty rates is still needed to increase housing market liquidity and maximise any stimulus the government plans to provide to the UK economy.”

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Expats will remain confident after rates remain at 0.75%

The Bank of England kept interest rates steady on Thursday 30/1/2020, saying signs that Britain’s economy had picked up since December’s election, and a more stable global economy, meant more stimulus was not needed now.

Financial markets had seen a 50% chance of a cut, but the Monetary Policy Committee split once again 7-2 in favour of keeping Bank Rate at 0.75%.

Bank of England governor Mark Carney speaks of ‘modest’ economic forecast after the bank surprised many investors by leaving interest rates unchanged at 0.75% in its latest monetary policy decision.

The central bank kept the door open for a move after Governor Mark Carney hands over to his successor, Andrew Bailey, in March.

“Policy may need to reinforce the expected recovery in UK GDP growth should the more positive signals from recent indicators of global and domestic activity not be sustained or should indicators of domestic prices remain relatively weak,” the BoE said in its quarterly Monetary Policy Report.

But if growth picked up as suggested by upbeat business surveys since Prime Minister Boris Johnson’s unexpectedly emphatic Dec. 12 election win, “some modest tightening” of policy might be needed further ahead, the BoE said.

The central bank no longer specified that such tightening would be “limited and gradual”, a long-standing piece of BoE guidance that dated back to a time when a more rapid pace of interest rate increases might have looked likely.

The central bank estimated Britain’s economy did not grow at all in the final three months of 2019, a time of political uncertainty when parliament forced a delay to Brexit and a snap election raised the prospect of a change in government.

This will have a knock-on effect on economic growth for 2020, which the BoE forecasts will be just 0.8% for the year as a whole, the slowest since the financial crisis.

Growth is seen recovering over the year, however, reaching an annual rate of 1.2% by the final quarter of 2020.