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16 Jul 2020
After nearly four long months of inactivity in the Welsh property market, I was thrilled to hear some good news this week when the Welsh Government decided to follow suit and announce changes to the Land Transaction Tax (LTT) here in Wales.
After Rishi Sunak’s stamp duty announcement last week, we all hoped that it was surely just a matter of time before the Welsh Government introduced a similar initiative. It could have been disastrous for the market here in Wales, particularly in those areas close to the border, if house buyers in England could benefit from such significant savings but not have them apply here in Wales too.
Sure enough, Rebecca Evans, Finance Minister, revealed yesterday that the way LTT is charged in Wales would also change, in a bid to stimulate the residential property market after lockdown.
In Wales, properties valued at less than £180,000 were already exempt from Land Transaction Tax but since 2018, LTT has been charged at 3.5% for properties up to £250,000 and at 5% for homes up to £400,000. This new initiative will mean that payment of tax on any properties up to £250,000 will be waived until 31 March 2021.
Although the Welsh Government has not gone as far as matching the UK Government’s £500,000 threshold, I understand the reasons for that as average property prices in Wales are much lower. This announcement will mean that no tax will be paid on around 80% of transactions in Wales, which is really great news for anyone who is considering moving home. Depending on the value of the property they are purchasing, it could save the average buyer in Wales around £2,400, a significant saving. Many people will be able to put down a bigger deposit and so reduce the amount they will have to borrow on their mortgage.
It will not apply, however, to the purchase of additional properties such as buy-to-lets or second homes. These purchases will still incur an extra 3% in LTT on top of the tax that is payable for their band.
I do think that this will help to stimulate demand as having to pay the LTT can be a significant barrier to people whether they are buying their first home or thinking of selling up and moving on to a bigger house. The market is moving well at the moment but when furlough ends and with an anticipated recession looming, it is likely that it will need a boost.
My only frustration is that these changes don’t come into effect immediately but thankfully we won’t have to wait too long. We are anticipating a standstill on current house purchases for the next 12 days but then expect to be flooded with completions from 27 July, when the tax changes come into effect.
Hopefully it will have the desired effect and get more people in Wales buying and selling their homes, which is just what the economy needs as we start to emerge from lockdown.
If you are looking to buy or sell your property and are unsure about how the new rules affect you, give one of the friendly, experienced Residential Property team at Harding Evans a call on 01633 235145 or 02922676819 or click here get a quick conveyancing quote.
Watch Wyn Williams’ interview with Law Society Wales, discussing the implications of The Welsh Government Land Transaction Tax holiday for clients and firms.
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