Days after the chancellor of the exchequer said he would temporarily cut stamp duty for residential properties in England, the Welsh Government has announced a tax ‘holiday’ for homebuyers in Wales.
From 27 July, the land transaction tax threshold for main homes in Wales will rise from £180,000 to £250,000. The tax reduction measure will end on 31 March 2021. However, unlike in England, the new measure will not apply to second homes or buy-to-let properties.
House prices are considerably lower on average in Wales than in England. The Welsh Government estimates that around 80% of homebuyers liable to the main rates of land transaction tax will not pay any tax.
Finance minister Rebecca Evans said: ‘This tax holiday will help first-time buyers as well as those selling to move on, but we are taking a different direction to support jobs and housebuilding in Wales. While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market.’
The Law Society welcomed the ‘support and stimulus’ for the residential conveyancing market in Wales.
Mark Evans, chair of the Society’s Wales committee, said: ‘Transaction volumes were significantly down during lockdown and June saw negative annual house price growth for the first time since 2012. This is a time of upheaval in the lives of many who need to move home for various economic, social and personal reasons. A temporary reduction in residential property transaction costs to support such people and to bring forward demand makes sense. It will also be welcome news for solicitors whose volume of work has fallen.’
Evans added: ‘It is particularly welcome that this land transaction tax holiday is to take effect from 27 July, as this is the date the First Minister had previously advised people to prepare for reopening the housing market fully, and will be in force until the end of March 2021. It will bring the rate payable for purchases of main residences valued at between £180,000 and £250,000 to zero. Such properties selling for less than £180,000 are already exempt from paying the tax.
‘The home moving market will be stimulated but Welsh Government must remain vigilant to ensure the right balance of stability, fairness and confidence in the market is in place once this temporary measure ends.’
Last week chancellor Rishi Sunak announced that the government was increasing the nil rate threshold for stamp duty on residential property in England and Northern Ireland from £125,000 to £500,000 until 31 March 2021 as part of a 2020 ‘Plan for Jobs’. A 3% 'higher rate' on top of the revised standard rates will apply to additional properties with a value up to £500,000.
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Growing your practice in a challenging climate, the increase of cybercrime attacks and the continued uncertainty of the economy and property market are likely to affect conveyancers and property practitioners. Join the Law Society’s nineteenth annual Property conference where industry experts will offer the tools and support to equip you in these areas. We will also provide the latest updates on; residential conveyancing, the new commercial property documents, and how conveyancing might develop in the future.