Stamp duty announcements are not exactly ten-a-penny but they do come around fairly often, and given the current economic environment, it was no surprise to see the Chancellor, Rishi Sunak, announcing a holiday period for purchasers of properties up to £500k, until the end of March next year.
In the buy-to-let/private rental sector space these sorts of announcements tend not to register because, as much as the industry and landlord representatives have continued to push back against the 3% surcharge ever since it was introduced, governments have tended to give away nothing to landlords and there was certainly no inkling that this announcement would be any different.
Indeed, at the time of the ‘mini-Budget’, there was still a lot of digging around required in the official documentation before we could take in the fact that, yes indeed, this stamp duty holiday would also be open to those purchasing additional properties. Landlords would not be overlooked this time – well, not those purchasing in England and Northern Ireland at least.
And there we come to a rather tricky fork in the road, because at the time of the announcement by Sunak not only was there no such corresponding changes in Scotland and Wales, but the devolved nature of the government of those two countries meant there was no guarantee that a similar move would be made.
A week on from the stamp duty changes in England and Wales being implemented with immediate effect, we are still at a very different place when it comes to those West and North of the English border.
So, in Wales, the government has now announced a threshold increase in its equivalent of stamp duty, the Land Transaction Tax, upping its zero rate from £180k to £250k however that won’t come into effect until the 27th July. While in Scotland, the Land and Buildings Transaction Tax, is being increased from £145k to £250k – again purchasers won’t pay any tax for properties up to that amount.
However, and I hope you’re still with me, there is a level of divergence again here because while in Scotland this is a blanket measure that is available for landlords, in Wales the changes explicitly omit additional property owners. In other words, it’s the status quo in Wales for landlords where they’ll continue to pay the 3% surcharge and will not have access to the kind of savings that landlords in the other three countries will get up until the end of March 2021.
You may have seen recently a number of industry bodies, most notably the Conveyancing Association, calling on the Welsh government to open up the housing market in quicker fashion, citing the argument that it is falling much further behind England and it will therefore take much longer to get up to speed and start delivering for the Welsh economy.
One suspects this decision to leave landlords out of this latest Land Transaction Tax change will do nothing to dampen down the seemingly growing anger that Wales is on a very different track to England. How might landlords now view the current situation? Will we see acquisitive Welsh landlords looking to purchase over the border in England over the next eight or so months in order that they can make a saving? Will there be a noticeable impact on the level of purchases made in Wales because of this decision?
If nothing else, it is a definitive divergence with the policy of the Westminster government and indeed that taken in Holyrood. Devolved politics is not my area of expertise – and I should point out that Fleet does not lend in Scotland – but as we have seen in terms of the differing responses to the Covid-19 pandemic, there appears to be a much greater willingness to follow different tracks and for the devolved governments to flex their legislative muscle.
Whether this proves to be the right decision in Wales or not, remains to be seen however you might well sympathise with landlords there who having seen their English, Northern Irish and Scottish counterparts finally receiving some good stamp duty-related news, now find that they have nothing to celebrate after all.
Bob Young is chief executive officer at Fleet Mortgages