Higher residential rates of LTT increase 1% across all bands 22 December in Wales

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In the draft budget, on 21 December 2020, the Welsh Government announced changes to the higher residential rates, and non-residential rates and bands, of Land Transaction Tax (LTT). The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021.

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BREAKING: Welsh landlords outraged over sudden 1% hike in stamp duty

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The Welsh government has caused outrage among landlords after it today significantly hiked their tax bill when buying both residential and commercial property.

The biggest hit is a stamp duty increase for anyone buying a property that is not their principal residence including second homes and buy-to-let properties.

Stamp duty or Transaction Tax (LTT) as it is known in Wales, is charged at a higher rate for properties that are not purchased as a main home.

Welsh Ministers have also moved to ensure there is no ‘rush’ to buy properties – the new rules kick in at close of play tomorrow (22^nd December).

The current rates are 3% up to £180,000, 6.5% on the portion up to £250,000, 8% on the slab up to £400,000, 10.5% on up to £750,000, 13% up to £1.5 million and 15% on anything over that.

After tomorrow all these rates are to each rise by 1%. This means a landlord buying a £300,000 property in Wales will pay £13,400 in LTT today, but if they complete on Thursday the bill be £16,900.

But the Welsh government has also increased LTT on commercial property, not by raising the rate but increasing the range of prices it covers. For full details see the Welsh government’s website.

“This is simply unacceptable to increase the rate of additional property Land Transaction Tax in this fashion,” says John Stewart, Deputy Policy Director for the National Residential Landlords Association said.

“This increase will destabilise the private rental market in Wales, increasing costs on buying homes with immediate effect.

“The start of a national lockdown is not the time to put additional burdens on a sector already facing some of the longest and most severe Coronavirus restrictions and will deter investment in rental properties that we so badly need.”

Read more about LTT.

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BBC investigation slams portals, landlords and agents over ‘No DSS’ inaction

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A new BBC investigation into landlords and letting agents who post ‘No DSS’ adverts online has forced several leading portals to promise to do more to stamp out the practice.

Researchers at the broadcaster looked at 300,000 rental property listings on the key platforms used by landlords and agent to advertise properties including SpareRoom, OpenRent, Zoopla and Rightmove.

Both Rightmove and Zoopla were found to have relatively few ‘No DSS’ listings while the BBC claims that the majority of ads on OpenRent and SpareRoom make it clear that tenants on benefits will not be considered.

Both platforms told the investigation that they were working to address issues and, in the case of SpareRoom, changed its tech so landlords can only list rooms as unavailable to benefit claimants if their mortgage or insurance specifically ban it.

“However, we’ve seen far more rooms still being listed as unavailable than the small number we expected,” its director Matt Hutchinson (pictured) told the BBC.

“The reality is that there are almost no buy-to-let mortgages left with those clauses in them, so we’re currently in the process of removing the option to list as unavailable to benefit claimants completely.”

Universal credit

What the BBC investigation failed to point out is why so many landlords are reluctant to accept tenants in receipt of Universal Credit or other benefits.

Instead it reveals that it is just one of 13 reasons why landlords won’t accept, based on a YouGov poll of 634 landlords in December 2019.

As LandlordZONE has reported on numerous occasions, the government’s insistence that tenants are paid their rent direct, and the labyrinthine system that landlords must navigate to persuade tenants and the DWP to pay them the rent direct, can lead to rent arrears and significant losses for landlords.

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The uncertainty that surrounds the stamp duty holiday

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Unless you’ve been living on Mars, you will know that the stamp duty holiday introduced earlier in the year by Rishi Sunak has boosted the property sales market and you will know then when it comes to an end on the 31^st of March next year there could be a major problem.

Two questions on a lot of peoples’ mind: will you be able to take advantage of the tax saving on property sales starting or going through right now, and will the benefit be extended post March 31st?

To answer the first question, you would expect a sale starting now would easily meet the deadline to complete the sale before the 31^st of March – 3 months surely should be ample time. Not so say agents and solicitors who are dealing with these sales right now.

To take advantage of the stamp duty holiday you will find that, depending on the area in the country, some local authority searches are taking up to 16 weeks, which would put many a completion deadlined in jeopardy from today’s date.

What does the Stamp Duty Holiday mean to you?

Stamp Duty Land Transaction Tax (SDLT) normally applies on all properties over £125,000, or £300,000 for first-time buyers with an initial 3% surcharge if the purchase is a second home or investment property.

So, on 8 July 2020, Rishi Sunak the Chancellor of the Exchequer introduced a temporary stamp duty holiday which means that all sales below £500,000 (excepting the 2^nd property surcharge) are exempt SDLT until 31 March 2021. In case you are wondering, yes the good news is that the stamp duty holiday does apply to second homes.

However, whilst in England and Northern Ireland you don’t pay stamp duty on a residence up to £500,000, Scotland and Wales took a different path and put the threshold at £250,000.

As an example, for a £600,000 main residence you will currently to pay £5,000 in Stamp Duty as a non-first time buyer. You pay no stamp duty on the first £500,000, 5% on £500,001 to £925,000, 10% on £925,001 to £1,500,000, and 12% above £1,500,000. Your effective stamp duty rate for that purchase at £600,000 is 0.83%. Without the relief you would have paid £20,000, so a saving of £15,000 and an effective rate of 3.33%.

The good news is that yes, the stamp duty holiday does apply to second homes but not the 2^nd home surcharge. Anyone buying a 2^nd property, such as a second home or a buy-to-let property, will have to pay the extra 3% in stamp duty on top of the revised rates for all properties priced above £40,000, and it goes up to 15% on a sliding scale in bands: £0 – £500,000 is at 3%, £500,001 to £925,000 it goes to 8%, £925,001 to £1.5m it jumps to 13%, and over £1.5m it’s 15%

It may already be too late to take advantages of the savings, given that buying a property is a complicated process involving several stages, with multiple parties involved, especially if there’s a chain – it could easily take 3 to 4 months at this time from an accepted offer to a completed sale, given the glut of sales currently going through.

What about an extension to the SDLT deadline?

Despite strong pleas for an extension the Government in England (Treasury) has stated that it “does not plan” to extend. Estate agents, surveyors and solicitors have been hoping that the chancellor Rishi Sunak would extend the deadline to avoid a “cliff edge” and a property slump. But so far no luck, however, a petition has been started and nearly 28,000 people have signed already.

The Treasury says it decided not to extend, so people now fear the market will collapse after 31^st March, and in the meantime there’s a mad rush to get a quarter of a million property sales through, as buyers struggle to beat the deadline in a bogged down conveyancing process.

A call for the Scottish Government to take the lead and extend LBTT holiday

David Alexander, joint chief executive officer of apropos says:

“There is an opportunity for the First Minister to create a major difference for the people of Scotland and the housing market there by extending the deadline for the ending of the Land and Buildings Transaction Tax (LBTT) (Scotland’s stamp duty equivalent) holiday from 31st March to later in 2021.”

The lettings firm, apropos led by DJ Alexander is urging the Scottish Government to set an example to the rest of the UK by extending its stamp duty (LBTT) holiday beyond the current March 31st deadline. However, as The Treasury has already said, it has no plans to extend the deadline, Alexander is urgeing Nicola Sturgeon to “make a difference” in the Scottish property market by extending the tax holiday north of the Border.

“Scotland has been enjoying a boom in the property market since the lockdown began in March with average house prices rising by 6.8% between March and September from £151,285 to £161,510 which is much higher than the performance of the rest of the UK,” says Mr Alexander. He wants to see that continue.

Stamp Duty Land Tax

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Property developer loses weight to raise £1,000 for Danny Butcher Foundation

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Property developer Ed Akay (pictured) has raised an impressive four figure sum – by trimming his own figure on a gruelling health kick.

Ed took on a gruelling body transformation challenge to raise money for the Danny Butcher Foundation, setting a £200 target, and smashing it by £800.

The former model challenged himself to get his body fat ratio to 10% but is now down to an extremely svelte 9% and in such good shape that he’s been doing modelling shoots again.

Danny Butcher committed suicide in 2019 after he became depressed while trying to clear his debts run up on a £13,000 Property Investors course.

The foundation was set up in his name to raise money for homeless people, mental health charities and military veterans – all favourite causes of the former soldier.

Weight training

Ed, director at Devon-based property development company Gold Lake Developments, was trained by a natural bodybuilder and stuck to a lean protein diet and rigorous weight-training programme during the challenge.

“It wasn’t too hard to stick to as I’ve always been very disciplined and although I wasn’t used to doing higher weight repetitions, it became part of my normal routine,” he tells LandlordZONE. “I definitely feel like I’ve rolled back the years!”

Ed is determined to keep the weight off and the healthy lifestyle regime going, particularly as he’s started modelling part-time, but he’s equally keen to raise a bit more cash for the foundation before the end of the year.

He adds: “I’m proud of raising £1,000 but would be over the moon if we could make it to £1,500. Danny Butcher was a hero, and I would love to honour his memory by hitting that target.”

To donate go to Ed’s Facebook page

Picture credit: Colin Winstanley

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A Rollercoaster year

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Hometrack have released their latest House Price Index confirming their latest data for November indicating it has been a rollercoaster of a year with demand set to be up 33% compared to December 2019. Click here

The Pandemic has driven demand for space and quality of location

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Landlords ‘cannot bankroll the rent arrears crisis any longer without government help’

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Private landlords have reached their limit and cannot support tenants who are getting into rent arrears any longer, the National Residential Landlords association (NRLA) has claimed.

Its Chief Executive, Ben Beadle, says that although new government research shows private landlords have offered their tenants more support than social landlords such as housing associations and councils, it’s time for the government to put together a plan on rent arrears.

The latest English Housing Survey reveals that landlords within the PRS have been giving more help to tenants who cannot pay their rent during the Covid pandemic than those in the social sector.

Since the start of the pandemic six per cent of private renters had secured a reduction in their rent payments compared to only two per cent in the social sector.

Also, five per cent of private renters had agreed a rent holiday with their landlord compared to three per cent in the social sector.

And an additional 12 per cent of private tenants had reached another agreement with their landlord – such as a repayment plan – compared to nine per cent of social tenants.

Ben Beadle, the NRLA’s Chief Executive (pictured) says: “These figures prove what we have been saying that many private landlords have done everything they can to support renters affected by the pandemic.

“But their ability to provide further help has run out.

“The Government needs a proper plan to get COVID-related arrears paid off and sustain tenancies.

“Simply banning repossessions temporarily is just kicking the can down the road and is just making the eventual problems worse for both tenants and landlords.”

Read more about the government’s attitude to rent arrears.

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Rent to Rent Contracts – lots of questions?

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Do I need to protect a deposit via a protection scheme if received from a company for the lease of my house to them, if it is a commercial let and therefore NOT an AST?

Is it best to contract out of the L &

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