Shadow Finance Minister and North Wales MS Mark Isherwood has welcomed the extension to temporary Land Transaction Tax (LTT) relief in Wales, but regrets that it does not go far enough to help house buyers in Wales, particularly those purchasing a home for the first time.
The levy was waived in July last year for properties up to £250,000 and was originally set to end on 31st March 2021.
An extension has now been granted, but Mr Isherwood is concerned that the zero-rate band is remaining at £250,000, particularly when the nil-rate band for the equivalent Stamp Duty Land Tax in England is up to £500,000.
He has also warned that the approach in Wales will force first-time buyers over the border to save money, and therefore said Welsh Conservatives could not support could not support the ‘Land Transaction Tax (Temporary Variation of Rates and Bands for Residential Property Transactions) (Wales) (Amendment) Regulations 2021’.
Speaking in yesterday’s meeting of the Welsh Parliament, he said:
“As we heard, these regulations specify an extension to the current temporary variation to the Land Transaction Tax (“LTT”) rates and bands that will apply to purchases of certain residential property transactions, commencing on 1 April 2021 and ending on the 30 June 2021, with the rates and bands reverting back to those in force prior to 27 July 2020, after that date.
“We, of course, support this extension, although we regret that the ceiling on the zero-rate band is remaining at £250,000.
“Following the announcement by the UK Chancellor that the current Stamp Duty holiday in England, with the nil-rate band up to £500,000, was being extended until the end of June, and that the nil-rate band will then be £250,000 until the end of September to smooth the transition, returning to the normal rate there from October 1st, the Welsh Government announced that it was temporarily extending the equivalent LTT temporary tax reduction period in Wales until 30th June, but still keeping the ceiling on the nil-rate band at £250,000.
“In England the nil-rate for first-time buyers from 1st July will still be up to £300,000, whereas from 1st July in Wales the nil-rate band will only go up to £180,000, then rising to 3.5% up to £250,000 and 5% over £250,000.
“As someone who grew up in North Wales told me, they are buying a new build in Wrexham for £280,000, but this will add an additional cost of £3,950 to their purchase and they are therefore considering finding something in England instead.
“And although the ceiling on the nil-rate band in England will fall to £125,000 from 1st October, First Time Buyers there will then still pay nothing on purchases up to £300,000, unlike in Wales.
“Whereas this Welsh Government talks about average First Time Buyer purchase prices in Wales, these do not apply to large chunks of the population of Wales, particularly in populous cross border regions. We cannot therefore support these regulations and will abstain accordingly.”