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 Wales.
Rebecca Evans, Minister of Finance and Local Government stated the move is intended to ensure that the threshold for paying tax reflects the rise in prices of homes over the last two years. 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.
The changes in Wales have been brought forward because of the changes to Stamp Duty Land Tax in England and Northern Ireland. 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.
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.
