8:11 AM, 29th September 2022, About A year ago
Anyone buying a home for less than £225,000 in Wales will pay no tax, the Welsh Government has announced.
The threshold for paying Land Transaction Tax (LTT) is being increased from £180,000 to £225,000 with the change coming into force on 10 October 2022.
There will also be a small increase in the rate of LTT for homes that cost more than £345,000.
Anyone buying a home costing less than £345,000 will see a reduction in the tax they pay, up to a maximum of £1,575.
People buying homes worth more than £345,000 will see an increase – up to £550 – which represents around 15% of property transactions in Wales.
All other elements of Land Transaction Tax will remain unchanged, meaning there are no tax reductions provided to those purchasing second homes in the country.
Rebecca Evans, the minister of finance and local government said: “This is a change tailored to the unique needs of the housing market in Wales and contributes to our wider vision of a fairer tax system.
“61% of homebuyers will not pay tax on their purchase.
“These changes will get support to people who need it and help with the impact of rising interest rates.”
She added: “We also know that helping people at the lower end of the market will have a particular benefit for first time buyers.
“We help people buy their first home in a number of different ways, including shared ownership and help to buy schemes, and I am pleased to be able to extend that support through these changes to Land Transaction Tax.”
The changes have been brought forward because of changes to stamp duty land tax – paid in England and Northern Ireland – announced by the UK Government in last week’s financial statement.
The Welsh Government was considering making changes at its Budget later this year but is making changes now to give clarity to the housing market.
Nathan Emerson, the chief executive of Propertymark, said: “Wales has seen large growth in house prices due to spikes in demand, so it is therefore logical that the tax threshold would be changed in line with current property values.
“When LTT incentives are created, they are largely aimed at first time buyers, but incentives for downsizers or last time movers would encourage movement in the latter part of the market, which when blocked stops movement further down for second steppers and first-time buyers, causing stagnation as buyers have nothing to move on to.”
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