The Welsh government has decided to continue the 3% Stamp Duty surcharge for landlords.
The Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill, which was introduced to the National Assembly on 12th September 2016, details proposals for a new land transaction tax to replace Stamp Duty Land Tax (SDLT) in Wales from April 2018.
At present, the bill does not include provision for a higher rate of tax on purchases of additional properties, which currently exists under SDLT in England and Wales and Land and Buildings Transaction Tax in Scotland.
Welsh Government Decides to Continue 3% Stamp Duty Surcharge for Landlords
The 3% Stamp Duty surcharge for landlords was introduced on 1st April this year. This guide explains how the additional tax will affect you: /landlords-guide-3-stamp-duty-surcharge/
To better understand whether the higher rate of tax should be introduced under the new bill, the Welsh government published a Treasury Paper and conducted a technical survey on the operation and application of the surcharge.
A total of 100 responses were received, with varied views. The government reports that some respondents believed it is important to remain consistent across the UK, so that distortions aren’t created, particularly across the England-Wales border.
Mark Drakeford, the Cabinet Secretary for Finance and Local Government, also believes: “As the Treasury Paper highlighted, there will be a significant reduction in the resources available for public services if we do not include a higher rate for additional properties in land transaction tax. Therefore, to protect the delivery of public services, I intend to make provision for a higher rate surcharge on purchases of additional residential properties in the Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill during stage 2.”
However, he adds that the government will “continue to explore the suggestions put forward by stakeholders about how the higher rate can be adapted to meet Wales’ circumstances.”
A summary of the responses can be found here: http://gov.wales/docs/caecd/publications/161014-ltt-responses-en.pdf
The Managing Directors of both the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA), David Cox and Mark Hayward, respond to the Welsh government’s decision to continue the 3% Stamp Duty surcharge for landlords:
“We are disappointed that the Welsh government has decided to take this decision and followed the rest of the UK in implementing this punitive regime for buy-to-let landlords.
“We have been highly supportive of the new devolved tax regime in Wales, precisely because it was a way that it could set its own tax agenda that works best for the housing sector in the region. In continuing with the surcharge, the Welsh government is not making the most of its new powers in order to increase the supply of homes that Wales so desperately needs.”
They also warn of further damage to the property market: “The measures will lead to increased rent prices through a fall in supply and increasing demand. Tenants will also see additional costs passed onto them, as landlords look for ways to increase the profitability of their properties in the face of spiralling expenses. Ultimately, this will lead to sub-standard accommodation, as money, previously used for the upkeep of homes, will be swallowed up in tax payments.”