Welsh Government announces tax holiday on house sales under £250,000

Housebuyers in Wales won’t pay tax on the sale if their property costs less than £250,000.

The Welsh Government, which has responsibility for setting Land Transaction Tax, has increased the threshold from £180,000 to £250,000 for residential sales taking place between July 27 this year and March 31 next year.

The new rate is only applicable to buyers purchasing their main home in Wales and will not apply for buy-to-let investors or second homes.

On Wednesday, July 8, UK Government Chancellor Rishi Sunak announced a Stamp Duty holiday for homes sold up to £500,000 in England and Northern Ireland.

Wales took over responsibility for property sales tax in 2018 and replaced Stamp Duty with the Land Transaction Tax.

The Welsh Government said that around 80% of homebuyers liable for the main rates of the tax will no longer have to pay it – a saving of £2,450 per transaction.

According to Land Registry data, the average house price in Wales in March this year was £162,000 – lower than in England which was £248,000.

In Caerphilly County Borough, the average cost of a house in March 2020 was £138,459.

Announcing the changes, Wales’ 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 house building 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

“Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20% under our current measures.

“By setting these rates for Wales I am also able to confirm £30m to support the construction of new social housing and the much-needed jobs they can deliver.”

South Wales East MS Delyth Jewell, Plaid Cymru’s Shadow Minister for Public Service Transformation, said: “Changes to the land transaction tax should always focus on those who need support in getting on the housing ladder. With so many finding it difficult in making that a reality we welcome the decision not to extend the measures to second home ownership and buy to let properties.

“This announcement, however, does not address the housing crisis which Labour has presided over, and a Plaid Cymru government would work to ensure that 50% of new building developments should be social housing.”

Caerphilly’s Labour Senedd Member Hefin David said he too welcomed the decision but added: “I find Plaid Cymru’s attack rather distateful.

“Their councillors recently voted against a development with 66% affordable housing in Pontllanfraith, which would have taken pressure off the south of Caerphilly for housing.”