The Welsh government’s plans to alter tax reliefs have sparked concern among property investors, who warn that such changes could reduce the availability of student accommodation and other rental properties. A recent consultation report on the Land Transaction Tax (LTT), which is akin to Stamp Duty Land Tax, includes proposals to abolish Multiple Dwellings Relief (MDR) and LTT relief for the purchase of six or more dwellings in a single transaction. Respondents to the consultation fear these changes could deter investment and negatively affect the Welsh economy.
Risks to the Economy and Housing Market
The report highlights significant concerns from stakeholders. “Some felt that abolishing MDR would disincentivise investment in property rental sectors, which could lead to declines in housing supply and the wider Welsh economy,” the report states. It underscores the importance of sectors benefiting from LTT MDR, including the private rented sector, purpose-built student housing, and the build-to-rent sector. These sectors play a crucial role in maintaining housing supply, and any reduction in investment could have far-reaching consequences.
Economic Implications and Revenue
From April 2022 to March 2023, the Welsh Revenue Authority recorded 59,560 transactions for LTT, generating £287 million in revenue. This figure includes £92 million from higher rates, marking a 50% increase from the previous year. The Welsh government is considering the potential benefits of abolishing these reliefs, such as increased revenues and tax simplification. Advocates argue that these changes could empower individual taxpayers to buy homes rather than rent, potentially boosting homeownership rates.
Call for Further Assessment
Propertymark, a leading industry body, has urged the government to reduce Land Transaction Tax levels for landlords to stimulate the supply of affordable homes in the private rented sector. The Welsh government has acknowledged these concerns and stated that it will continue to assess the potential impacts of the proposed changes. Further discussions may be held before a final decision is made, reflecting the high priority of this issue.
As the debate continues, landlords and investors are watching closely, hoping for outcomes that will support both the rental market and the broader Welsh economy. The potential changes to LTT and MDR remain a pivotal topic, with significant implications for housing supply and investment in Wales.
