Homeowners to have more time to claim back tax payments

Propertymark supports Welsh Government proposals to extend the time allowed to apply for refunds and exemptions to land transaction tax (LTT) higher residential rates for taxpayers affected by fire safety defects or emergency restrictions but calls for the Covid-19 restrictions to be included.

The word tax spelled out on wooden toy blocks

A positive change for consumers

Currently, the higher residential rates of LTT are charged on transactions including the purchase of a dwelling or dwellings costing £40,000 or more, when the homebuyer already owns an interest in one or more other dwelling(s) worth more than £40,000. Refunds and exceptions can apply, but only for up to three years from the date of the new purchase.

The refund and exception rules are intended to provide taxpayers with the necessary flexibility to bridge between homes, without incurring LTT higher residential rates charges. Overall, we think that the proposals will offer greater fairness to consumers impacted by circumstances outside of their control and allow them the opportunity to access exemptions.

What will change

Under the proposals, there will be unlimited time allowed for the taxpayer in a Purchase Before Sale (PBS) case to claim a refund or exemption if the sale of a former main residence was prevented due to emergency restrictions (or other action taken by a public authority), or where the sale of a former main residence was held up due to fire safety defects.

Additionally, for PBS cases that were delayed by fire safety defects, the extension will be retrospectively applied to transactions which took place at any time since 1 April 2018.

Sale Before Purchase cases will only be eligible for the extended time where the purchase of a new only or main residence was prevented owing to emergency restrictions.

Propertymark recommends that the exemption for fire safety defects should be capped at five years as we believe that is adequate time for them to be put right.

Covid disruption underestimated

The new rules will not allow claims related to the Covid-19 restrictions, which came into force in 2020 and led to the closure of the housing market, because the Welsh Government considers there was enough time to sell property between the point the market reopened in July 2020 and 1 April 2021, which was the first point at which the three-year period could have ended.

Propertymark disputes that there was sufficient time for housing transactions to be completed in this period, mainly because of backlogs in local authority searches and conveyancing delays.

There was significant disruption to the housing market, with the Welsh Government initially only allowing people to move if it was essential to do so and the move could not be postponed. In May 2020, it was reported by Zoopla that an estimated 400,000 property transactions stalled in the UK due to the coronavirus pandemic.

Resources for agents

Land Transaction Tax (LTT) replaced Stamp Duty Land Tax (SDLT) in Wales in April 2018. It is the levy all buyers must pay when purchasing a property over £225,000. When the legislation was first developed, we played a key role in lobbying for tax bands better suited to the value of property in Wales.

Land Transaction Tax in Wales

LTT has replaced stamp duty in Wales when the legislation was first developed we played a key role in lobbying for tax bands better suited to the value of property in Wales.

Propertymark also collaborated with the Welsh Revenue Authority (WRA) to produce a downloadable leaflet to support agents in providing potential home buyers with the details regarding Land Transaction Tax (LTT).

Welsh Revenue Authority Land Transaction Tax leaflet
28 Jul 2021
Land Transaction Tax: home buyer's information
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