Welsh Government to keep 3% surcharge on Buy-to-Let homes
Recently, we wrote a blog about the Land Transaction Tax bill introduced by the Welsh Government that will replace the Stamp Duty Tax when it is devolved in April. At the time, there was no news as to whether Wales would keep the 3% stamp duty tax, and many landlords and property experts hoped that the Welsh Government would use the Land Transaction Tax as an opportunity to scrap this controversial charge.
It has now been revealed that there are no plans to remove the 3% charge, much to the disappointment of many property experts, estate agents and of course, property buyers and sellers.
Why was the charge kept in place?
The Welsh Finance Secretary, Mike Drakeford, commented on the Welsh Government’s decision to keep the 3% surcharge by claiming that during a consultation about the charges and changes that would come with the new bill, many of those consulted said that they would prefer to see tax rules that were consistent across the whole of the UK.
He continued by saying that the government, and those affected by the tax, should see the devolution of Stamp Duty and the introduction of the Land Transaction Tax as a positive, as it provides the opportunity to focus on Welsh priorities and improve tax efficiency.
Douglas Haig, the Residential Landlords Association (RLA) director for Wales, responded to this news, calling it disappointing. He continued by arguing that the tax was restrictive and it negatively affected the private rental sector, which has done a lot to improve the Welsh housing crisis.
In fact, the RLA has been advocating exemptions from the tax, and the RLA will now be working with the Welsh Government in order to discuss which exemptions would make these (lack of) tax changes fairer for private landlords. Suggested exceptions include waiving the tax if a property is purchased after having been on the market for over a year, and also if the property is bought off plan. However, whether or not these exemptions go through will not be revealed until a later date.
How will these changes affect tenants?
The removal of the 3% stamp duty charge would have provided Welsh landlords with something positive to hold onto amid news of Mortgage Interest Relief Changes, as well as the introduction of Rent Smart Wales. Changes to the rental sector means that landlords are likely to see a decline in their profits, which can only be bad news for tenants.
Apparently, following these tax changes, 84% of private rental sector landlords would have to consider raising rents for tenants.
If you’re a Cardiff landlord concerned about how these new bills will affect your property income, at CPS Homes we can put your mind at ease. We are one of Cardiff’s largest professional letting and estate agencies, and we have the experience to offer you the best advice to ensure you never lose money on your investment. To find out more about our property management, letting or sales services, pop into one of our branches in Cathays, Roath or Cardiff Bay, contact us, or email us at enquiries@cpshomes.co.uk.
