Senedd rubber stamps £7m property tax rise

Chris Haines – ICNN Senedd reporter

Senedd members have rubber stamped a £7m increase in the higher rate of land transaction tax.

Mark Drakeford said the rise in land transaction tax makes rates in Wales broadly comparable with the equivalent stamp duty land tax in England and Northern Ireland.

He told the Senedd the higher rate, which applies to additional property purchases, rises by 1% across all bands, creating a 5% surcharge over the rates payable by other homebuyers.

Wales’ finance secretary stressed no changes have been made to the main residential rates, with higher rates applying to second homes, buy-to-lets and companies buying dwellings.

The regulations came into force overnight on December 10 after being announced as part of the draft budget but Senedd approval was required to make the changes permanent.

‘Difference of principle’

Prof Drakeford said transitional arrangements were provided for buyers who exchanged contracts before rates changed but completed their transactions afterwards.

Sam Rowlands, the Conservatives’ shadow finance secretary, opposed the increase, saying people are already taxed to a significant level across Wales.

He told the Senedd: “There are other people also caught up in this particular tax, such as a parent or grandparent perhaps seeking to support their child or grandchild with a purchase of a property if they themselves are already property owners.

“And when we look at the amounts here: while this is a 1% increase on each of those bands, when we’re looking at average house prices in Wales creeping up to around £250,000 – that particular bracket is now at 10%.”

Prof Drakeford replied: “I understand the point Sam Rowlands has made because … they are a difference of principle between the Conservative party and those on these benches.

‘Vulnerable’

“We believe in progressive taxation and the Welsh Conservative party does not.

“The number of transactions that the higher rates affect is a small minority … and these are all transactions being undertaken by people who have the broadest shoulders.”

The former first minister said it was important to protect the budget against block grant adjustments, which can remove funding based on tax raised by the Welsh Government.

He told the chamber: “A decision to vote against the regulations today is not simply a decision to leave the £7m without its impact on public services, but would double the adverse impact through leaving us vulnerable to that block grant adjustment.”

Senedd members voted 37-10 in favour of the motion on January 21.

Land transaction tax was introduced by the Welsh Government alongside landfill disposals tax in April 2018, becoming the first Wales-only taxes in around 800 years.