0:01 AM, 12th December 2024, About 4 hours ago
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Industry bodies have blasted the Welsh labour government over raising stamp duty for landlords and second homeowners in the Welsh Budget.
Former First Minister and now Finance Secretary, Mark Drakeford, has announced a 1% increase in Land Transaction Tax (LTT) on additional properties, which is the Welsh equivalent of stamp duty.
The NRLA warns the increase could discourage investment in the private rented sector.
Mr Drakeford announced that the increase will take effect immediately and claimed it will raise an estimated additional £7 million in 2025-26.
According to the National Residential Landlords Association (NRLA), the percentage point rise in Land Transaction Tax (LTT) is equivalent to 5% for properties valued at up to £180,000, increasing to 17% for homes costing over £1.5 million.
For properties valued between £0 and £180,000, the rate is 5%. For homes priced between £180,000 and £250,000, the rate rises to 8.5%. Properties valued between £250,000 and £400,000 will see a rate of 10%, while those priced between £400,000 and £750,000 will be taxed at 12.5%.
For homes worth between £750,000 and £1.5 million, the rate is 15%, and for properties above £1.5 million, the rate jumps to 17%.
Mr Drakeford pointed out that the change is broadly in line with adjustments made to Stamp Duty Land Tax in England and Northern Ireland.
The Chancellor Rachel Reeves announced in the Budget that the stamp duty surcharge on additional homes will increase from 3% to 5% in England.
Ben Beadle, chief executive of the NRLA, called the stamp duty increase by the Welsh government “baffling” and “the increase would only hurt tenants”.
He said: “This move by the Welsh government will do nothing to help renters who are already struggling to find a home to rent.
“To discourage investment in the market with punitive taxation at a time when Wales needs many more homes for rent is a frankly baffling move.
“The announcement will worsen the ongoing shortage of homes, narrow tenant choice, increase rents and cause misery for tenants.”
Tim Thomas, policy and campaigns officer at Propertymark, welcomed the investment in affordable housing but criticised the Welsh government for the increase in LTT.
He said: “Propertymark is disappointed that Land Transaction Tax for additional properties has increased by 1%. The investment in affordable and social homes is welcome, but until social housing supply keeps up with demand, we called for the surcharge on additional properties to be cut to stimulate supply in the private rented sector.
“However, is encouraging that the Welsh government has listened to our call for fair funding for local authorities in Wales given the requirements of enforcing the Renting Homes (Wales) Act and proposed Building Safety Act. This increase in funds must be used for these additional legislative challenges for the housing sector.”
