Landlords and property investors who buy privately-held multi-property portfolios in Wales are to lose another tax perk.

The Welsh Government intends to abolish land transaction tax (LTT) multiple-dwellings relief (MDR) and has opened a consultation that will run for just six weeks, its Finance Minister Rebecca Evans (main picture) has revealed.

This has been prompted by Chancellor Jeremy Hunt’s decision to cut MDR in England within his most recent budget, and Wales is now following suit. MDR, which was first introduced by the English Government in 2011, gives anyone buying a property which contains multiple properties the opportunity to claim relief from the full ‘stamp duty’ (in England) and land transaction tax (in Wales).

MDR works by applying SDLT/LTT rates based on the average price of each dwelling rather than the total that would have been charged if they were all ‘single’ dwellings.

This, in some circumstances can include when buying HMOs but only if each resident’s room has separate washing and cooking facilities, qualifying it as a dwelling.

Encourage investment

But the key driver behind its introduction was to encourage investment in property for those buying portfolios (i.e. ‘linked properties’) or developers buying multiple units for renovation or redevelopment.

A 2021 consultation in England claimed that MDR made little difference to the market but the Welsh Government disagrees, saying it will help raise an extra £8 million in revenues ‘in the coming years’.

In Wales, councils buying multiple homes for social housing are to be exempted.

Announcing the consultation Evans said: “I encourage all those with an interest to respond to the consultation [which] closes on 19 May 2024. After it closes, I will give due consideration to all the responses and issue a report on the consultation.”