Welsh landlords hit with new tax hike
Landlord transaction tax in Wales on residential homes will be increased by 1% as of tomorrow, following an announcement by the Welsh Government.
In the draft budget today the Welsh Government announced changes to the higher residential rates, and non-residential rates and bands, of Land Transaction Tax (LTT) – the equivalent of stamp duty in England.
The change will apply across all bands.
The government has said in most cases where you have already exchanged contracts, but not completed you will be able to use the previous higher rates.
The Government said on 22 December 2020:
- the zero-rate band of the tax charged for lease premiums and assignments, and freehold property transfers will increase from £150,000 to £225,000
- the zero-rate band of the tax charged on the rent element of non-residential leases will increase from £150,000 to £225,000
The NRLA said the move – introduced with no notice, just days before Christmas - is unacceptable.
John Stewart, Deputy Policy Director for the National Residential Landlords Association said:
“It is simply unacceptable to increase the rate of Land Transaction Tax in this fashion.
“This increase will destabilise the private rental market in Wales, increasing costs on buying homes with immediate effect.
“Anyone buying a new home, before they can sell their current principle residence, will have to find this extra money up front.
“This may also cause some transactions to collapse and cause further hold-ups for anyone caught in a chain.
“The start of a national lockdown is not the time to put additional burdens on a sector already facing some of the longest and most severe Coronavirus restrictions and will deter investment in rental properties that we so badly need.”
End of temporary reduction period
The Welsh Government have confirmed that the temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021.
This means on 1 April 2021, these rates will revert to the original rates and starting threshold of £180,000. Purchases must be completed before this date to use the temporary reduction rates.
Rates and bands
The Welsh Government has updated the rates and bands page and its official tax calculator to include the new rates that come into effect on 22 December 2020 along with its LTT guidance.
