Land Transaction Tax (LTT) in Wales is to increase by 1% today (11th December) following the publication of the Welsh government’s draft budget.
The higher date of LTT applies to second home purchases with Cabinet Secretary for Finance and Welsh Language Mark Drakeford indicating the increase will raise an additional estimated £7m in 2025-26, which will ‘increase the funding available to invest in public services in Wales.’
For clarity, the statement goes on to confirm ‘taxpayers who have already exchanged contracts will pay the former rates so long as they comply with the relevant transitional rules.’ No further changes to any other band rates are proposed.
The draft budget also warns further regulations to amend multiple dwellings relief (MDR) will be brought to ‘improve the regime underpinning the purchases of more than one property in a transaction.’ Mr Drakeford added
“claims will not be allowed where the Subsidiary Dwelling Exemption (SDE) is applied, so taxpayers subject to the SDE would pay the main residential rates on the total consideration, without the benefit of MDR… Further work will be carried out to consider MDR relief within the LTT regime over the coming year.”
The Welsh government have made targeting second home and holiday home owners in Wales a priority; with council tax premiums in some areas and this latest move shifting the higher rate of LTT to 5 percentage points above the main rate. In England and Wales the current surcharge is 3%.
Higher Residential Rates from 11 December 2024
| Band | Rate |
|---|---|
| The portion up to and including £180,000 | 5% |
| The portion over £180,000 up to and including £250,000 | 8.5% |
| The portion over £250,000 up to and including £400,000 | 10% |
| The portion over £400,000 up to and including £750,000 | 12.5% |
| The portion over £750,000 up to and including £1,500,000 | 15% |
| The portion over £1,500,000 | 17% |
The move appears to have taken much of the sector by surprise. Tim Thomas, Policy and Campaigns Officer at Propertymark, said:
“Propertymark is disappointed that Land Transaction Tax for additional properties has increased by 1%. The investment in affordable and social homes is welcome, but until social housing supply keeps up with demand, we called for the surcharge on additional properties to be cut to stimulate supply in the private rented sector.
“However, is encouraging that the Welsh Government has listened to our call for fair funding for local authorities in Wales given the requirements of enforcing the Renting Homes (Wales) Act and proposed Building Safety Act. This increase in funds must be used for these additional legislative challenges for the housing sector.”
