Welsh government slammed for tax hike on second homes

The Welsh government has been sharply criticised for failing to recognise the impact of its decision to increase land transaction tax – the Welsh version of stamp duty – on second homes in Wales.

The move, announced as part of the Welsh government’s budget for 2021-22, is expected to raise £13m for social housing.

John Stewart

It will see second homeowners paying a 4% levy when they buy properties up to £180,000, rising to 16% for homes worth at least £1.6m.

But the changes to land transaction tax, which comes just two days after Wales entered the latest coronavirus lockdown, has been described as “unacceptable” by the National Residential Landlords Association (NRLA).

John Stewart, deputy policy director for the NRLA, said: “This is simply unacceptable to increase the rate of additional property 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.”

But the budget announcement has been defended by finance minister Rebecca Evans, who also confirmed that the stamp duty holiday will not be extended in Wales.

Rebecca Evans

She has said the budget would mean “difficult choice” as extra Covid-19 funding dries up.

While Wales received an extra £5bn in funding from the UK government this year to deal with the pandemic, this will fall to £766m, in 2021-2022.

Evans said the budget’s “progressive measures will support our businesses, economy and boost our funding for public services in the wake of the crisis”.

She added: “As we plan for our first steps beyond the pandemic, this budget is designed to protect health and our economy, build a greener future and create change for a more prosperous, more equal, and a greener Wales.”

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3 Comments

  1. Hillofwad71

    Unlikely  to yield much revenue at all  but a move more politically driven as Welsh Labour feel the heat  of  the Yes Cymru campaign   which is gathering  momentum during COVID .

    One of the central populist   gripes of Yes Cymru  is that the number of second homes in Wales add little to the local economy and makes  life more difficult for local  people to get on the Housing ladder.  Prices rising  making them unaffordable and beyond reach

    Parodied by the “Cheshire Set” Lives in Wilmslow. 

    Summer in Abersock (Cheshire-by-Sea)

    Winter Costa del Sol.

    Parodi

    Maybe some truth in that but jobs for local tradesmen  and estate agents !

    This move by the Welsh Senedd seen as somehow improving this situation . it will have no affect on house prices  produce little revenue Forgetting that it is it their power to stimulate  affordable  housing by increasing supply side l

     

    The irony is not lost that Ceredigion County Council  allow second homers to register their holiday/second homes as a small business.Just a few boxes to tick. This entitles them to” small business rates relief  “and much to the chagrin of the locals means that they  pay no rates at all !

     

    Not only that managed to trouser COVID grants to for voids

     

    Taketh with one hand ,giveth with another .

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    1. APE

      I always impressed at how well informed you are!  Thank you for your insight on this and all the many financials in other posts.  Merry Christmas!

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  2. JonnyBanana43

    Typical socialist policy. Will hit local jobs and trades….but might win a few votes.

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