The Welsh Government is being called upon to open up the housing market at a quicker pace and to match the recent changes to stamp duty land tax that have been introduced with immediate effect in both England and Northern Ireland.
On Thursday, Scotland said house buyers will not pay tax on properties sold for for less than £250,000. However, the Welsh Government are yet to respond to the measures.
Rebecca Evans, Minister for Finance in Wales has so far only responded on Twitter, saying that a ‘decision will be announced early next week’ and accusing UK Government for not informing Welsh Government ahead of the announcement. This is despite the speculation for weeks that this is what the Government had planned to do.
The UK Government did not tell @WelshGovernment in advance they were cutting Stamp Duty in England, despite the implications this clearly has for Wales’ housing market. (1/2)
— Rebecca Evans (@wgmin_finance) July 10, 2020
Last month, the Welsh Government announced only a partial reopening of the housing market in Wales meaning:
- All house moves could only go ahead where the residential property had been unoccupied i.e. vacant for at least 72 hours.
- House moves could take place where a sale had been agreed but not yet completed.
- The marketing and viewing of unoccupied residential property can take place.
- Valuations and inspections of occupied residential property were allowed but should be done so safely and in line with the Welsh Government’s guidance on working in someone’s home.
Currently in Wales no tax is paid on the first £180k of a property, however it increases to 3.5% up to £250k, 5% up to £400k, and 7.5% up to £750k. From the 8th July, residential property purchasers in England and Northern Ireland, buying property under £500k, will pay no stamp duty, up until the end of March 2021.
This would mean a residential owner buying a main residence at £500k would pay no stamp duty in England and Northern Ireland during the period, but £17,450 land tax in Wales.
The Conveyancing Association (CA), the leading trade body for the conveyancing industry has joined house builders across Wales in calling for the Welsh Government to take action.
The CA has urged the Welsh Government to review this approach, and to analyse the market and sector-specific guidance that has been drafted and issued to all practitioners in England, suggesting that the same rules and measures could be put in place to allow the housing market to be fully opened up.
The CA has also asked the Welsh Government to consider matching the recent Government changes to stamp duty for purchasers in England and Northern Ireland in its own Land Transaction Tax scheme.
Paul Smee, Chair of the Conveyancing Association, said:
“We fully appreciate the public health concerns that the Welsh Government is weighing up when looking at when to fully open the housing market, however we must also highlight that there is no evidence to suggest that opening up the English housing market has caused any spikes in cases or has put people at greater risk.
“If anything, because of the excellent guidance that was collated and issued to the entire industry, we have been able to mitigate strongly against any such risk. This guidance can be easily shared with all our Welsh colleagues and the likelihood is that by following this, we create a safe environment and are able to move the housing market forward.
“If it continues to work at a slower pace, and if it feels unable to match the stamp duty changes made in England and Northern Ireland, we believe it is only fair that the Welsh Government explain its reluctance to open up the market and provide a much-needed activity catalyst, given that all evidence elsewhere suggests this would be a safe outcome.”
Tim Grey, Sales Director of Llanmoor Homes, said:
“The Welsh Government needs to act fast to aid the economic recovery here in Wales.
“The housing market supports thousands of jobs in Wales and housebuilding generates tens of millions of pounds for the Welsh economy every year.
“It is vital that home buyers in this valuable sector are urgently given the support and encouragement they need to help Wales recover from the impact of Covid-19.
“That’s why today we are calling on the Welsh Government and Welsh Ministers to follow England’s lead and announce an immediate cut to the Land Transaction Tax.
“This will give people in Wales the confidence to look for their first home or consider moving.
“The UK Government has already announced a major overhaul of the planning system in England as part of its ambition to ‘build, build, build’ for the future.
“Meanwhile in Wales the planning system is still holding back new development being commenced with all of the benefits that such will bring and at present we have seen no evidence of any proposals for similar initiatives coming from the Welsh Government.
“We cannot afford for Wales to be left behind.”
Matthew Pratt, Chief Executive at Redrow, commented:
“The Welsh Government has an opportunity to further stimulate the housing market as well as the wider economy across Wales.
“An immediate cut in the Land Transaction Tax would not only offer much-needed support to housebuilders and those seeking entry to the housing market, but also to the associated suppliers, subcontractors and consultants who rely on house sales and the continuation of housebuilding to remain in business.
“Wales is now entering a new phase of economic recovery and we would strongly recommend a suspension of this tax to provide the stimulus for additional spending across the country.”