Welsh Government considers abolishing LTT Multiple Dwellings Relief

Welsh Government considers abolishing LTT Multiple Dwellings Relief

0:07 AM, 17th April 2024, About 2 months ago 1

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Landlords in Wales need to know about a Welsh Government consultation for the public to give its views on changes to the Land Transaction Tax (LTT).

The consultation focuses on two main proposals: abolishing relief for purchases of multiple dwellings and extending existing relief to local authorities when buying property for social housing.

The government is considering abolishing the Multiple Dwelling Relief (MDR) to offset a reduction in funding from the UK government.

This follows its decision to abolish the equivalent relief in England.

Rule that applies to purchases of six or more dwellings

The government consultation also seeks views on potentially removing a separate rule that applies to purchases of six or more dwellings in a single transaction.

On this issue, Propertymark says: “Currently, when buying six or more dwellings in a single transaction, the taxpayer can choose between treating the transaction as non-residential, and paying LTT at the non-residential rates, or treating the transaction as residential and paying the higher residential rates, in which case they can claim MDR.

“If LTT MDR is abolished, taxpayer discretion in transactions involving six or more dwellings would end, and all such transactions would be charged at the non-residential rates.

“There is a possibility that this could create unfairness for people buying between two and five dwellings in a single transaction, compared to those buying six or more dwellings.

“In some cases, those buying fewer properties might pay larger amounts of tax, as well as at a higher rate, than those purchasing more.”

Propertymark offers this example: if MDR wasn’t available a buyer acquiring five dwellings costing £300,000 per dwelling (total consideration of £1,500,000) would pay £171,200 in LTT at the higher residential rates, but a buyer acquiring six such dwellings (total consideration £1,800,000) would pay £85,750 in LTT at the non-residential rates.

The consultation is open for a shorter period of six weeks, reflecting the urgency of some of the issues.

The Welsh Government will consider the responses before issuing a report and outlining its next steps.


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Comments

Paul Essex

17:23 PM, 17th April 2024, About 2 months ago

So that will discourage the group purchase of a rental portfolio.

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