The Welsh government is being urged to think twice before pressing ahead with proposals to introduce local variations to the higher rate of Land Transaction Tax (LTT) on additional properties.

The plans would mean that where second home ownership and short-term holiday let activity were deemed to be negatively impacting a defined, local area, the higher rate of LTT could be raised to dissuade further investment.

But Propertymark’s policy team is keen to pint out that there are already mechanisms in place that are not being fully harnessed including council tax premiums and regulation and licensing of short-term lets.

Daryl McIntosh, Propertymark’s policy manager for devolved countries, said: “Any link between second home ownership and house price inflation needs to be sufficiently understood to warrant sweeping changes to the Land Transaction Tax regime.

“The Welsh government’s proposals are more likely to complicate the buying process and ultimately have a detrimental impact on property investment in Wales.”

McIntosh highlighted the fact that local authorities still need to be sufficiently resourced to undertake the necessary monitoring, saying he had “some doubts that enforcement, particularly around the policing of intended and actual use of property, is feasible”.

Higher rate LTT has historically accounted for approximately 40% of total LTT revenue and amounted to £66m in 2020-21.

Any reduction in revenue could have considerable consequences for the Welsh economy and these costs must be fully analysed before any changes are implemented, according to Propertymark.