New research from Compare My Move shows that the introduction of the Land Transaction Tax in Wales will save the average homebuyer £560.
Land Transaction Tax replaced Stamp Duty in Wales from 1st April 2018, and Compare My Move used their newly updated Cost of Moving House Calculator to highlight the changes for homebuyers.
- The average homebuyer in Wales will be £560 better off because of the changes.
- Homebuyers will only be worse off by the changes in Wales if they are purchasing a house worth more than £402,000.
- Powys has the biggest saving, with the average homebuyer saving £1,095 because of the changes. This is followed by Ceredigion and the Isle of Anglesey, where the average homebuyer will save £1,088 and £1,064 respectively.
- Areas where average prices are below the Stamp Duty threshold see no change.
- Second home owners will also pay less with the higher rate if the property is below £402,000.
- A £1,000,000 property will accrue £61,200 in Land Transaction Tax, compared to £43,750 in Stamp Duty.
Who Wins and Who Loses?
The average homebuyer in Wales will save £560 when the Land Transaction Tax replaces UK Stamp Duty Land Tax on April 1st.
With the current average house price in Wales at £153,034, the average homebuyer would have paid £560 in Stamp Duty before the change. Under the new Land Transaction Tax (LTT) rules, the average homebuyer would pay no rate on this purchase.
New research by Compare My Move shows that the average homebuyer in every area of Wales benefit from the changes. The exception is of course areas such as Rhondda Cynon Taf and Merthyr Tydfil where the average house price is below the Stamp Duty threshold.
Home buyers will be worse oby the changes in Wales if they are purchasing a house worth more than £402,000. It is from this point that the costs intersect, and Land Transaction Tax becomes more expensive than Stamp Duty. From this point the gap widens, with a £1,000,000 property costing £61,200 in Land Transaction Tax, compared to £43,750 in Stamp Duty. The biggest losers from the change will therefore will be those purchasing multi-million pound houses.
Which Areas Benefit Most From the Change?
The price bands and percentages dier between the Land Transaction Tax and Stamp Duty, but the biggest winners stem from the changes in the low end threshold. The fact that the 0% rate threshold has been raised to £180,000 means that areas with average house prices close to this amount are naturally the winners from this change.
In Powys for example, homebuyers purchasing a property for the average house price of £179,789 will pay no Land Transaction Tax, whereas in March would have paid £1,095 in Stamp Duty. Likewise, in Ceredigion and the Isle of Anglesey, the average homebuyer saves £1,088 and £1,064 respectively.
It’s worth noting that more expensive areas benefit less, for example the average homebuyer in Monmouthshire will have to fork out £2,277 in Land Transaction Tax, which is only a saving of £124 in comparison to Stamp Duty.
What About Second Home Owners?
Second home owners and those looking to buy to let will face the higher rates for both Stamp Duty and Land Transaction Tax. Land Transaction Tax’ higher rate mirrors Stamp Duty, in that it adds and extra 3% to every bracket.
Because of this, second home owners are actually better obuying in Wales for certain priced homes. For properties less than £402,000, second home owners in Wales will pay less than the equivalent Stamp Duty. It’s worth noting that for properties much more expensive than this, Land Transaction Tax is substantially more than Stamp Duty.
Marc Benger, Co-founder and Director of Compare My Move said:
“According to our research, the Land Transaction Tax looks set to benefit the average house buyer across the whole of Wales. In fact, the average homebuyer in only 3 of the 22 counties of Wales will pay Land Transaction Tax. Using the same average house prices, average homebuyers in 18 counties of Wales would pay Stamp Duty.
“When homebuyers in areas such as Powys look to save as much as £1,095, the changes can be seen as a great thing for prospective homeowners.
“When it comes to moving house, savings like these really do make a difference. We’ve updated our free Cost of Moving House Calculator to take into account the Land Transaction Tax in Wales, so that homebuyers are fully informed about the range of costs they face.
“When it comes to moving house, get informed, get comparing, and get saving.”
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