Fact sheet: ‘Replacement of Domestic Items’ relief for inventory clerks

Cyngor Gwynedd (Gwynedd Council) was quick to use new tax powers to raise the premium rate for second homes and short-term lets (STLs) to a rate of 150% from April 2023 and went on to be the first council to use an Article 4 direction, removing permitted development rights to change a main home into a second home or short-term holiday accommodation, in September 2024. The outcomes of implementing these new measures are being carefully watched by the housing sector.

HM Revenue and Customs (HMRC) has seen a spike in Stamp Duty Land Tax (SDLT) repayment requests where it’s claimed a property is not suitable for use (NSFU) as a dwelling so the lower, non-residential rates of SDLT apply. However, over 95% of NSFU claims are found to fall well below the required threshold, leaving property owners at risk of penalties.

In our consultation response, we urged the Welsh Government to reconsider plans to scrap the tax relief, citing the potential for loss of homes and the disproportionate impact on vulnerable tenants. Welsh Finance Secretary Mark Drakeford, MS, has now confirmed that The Land Transaction Tax (Modification of Relief for Acquisitions Involving Multiple Dwellings) (Wales) Regulations 2025, which will take effect on 7 February 2025, will change the rules for tax relief but not abolish it.

Cabinet Secretary for Finance and Local Government Shona Robison, MSP, announced a Budget which, she said would deliver on the priorities of the people of Scotland despite persistent financial pressures. However, her measures do little to address the ongoing housing crisis, and a decision to increase the Additional Dwelling Supplement will discourage new landlords from entering the sector.