The Welsh government’s publication of its Draft Budget for 2025/26 has not gone down well with property investors, including buy-to-let landlords.

It has been confirmed that Land Transaction Tax (LTT) for landlords will increase in a move that has been described as “baffling”, at a time when investors are being deterred from investing in the PRS despite the growing housing shortage in the sector.

In his Draft Budget, Finance Secretary Mark Drakeford announced that, as of today (11 December), landlords will be subject to an increase of 1 percentage point in every LTT band. As a result, higher LTT rates will be as follows:

+ £0 – £180,000 – 5%

+ More than £180,000 – £250,000 – 8.5%

+ More than £250,000 – £400,000 – 10%

+ More than £400,000 – £750,000 – 12.5%

+ More than £750,000 – £1.5m – £15%

+ Above £1.5m – 17%

The change has major implications for landlords across the Welsh private rented sector, who will see the costs of acquiring additional property, and consequently of providing homes, increase significantly.

Ben Beadle, chief executive at the National Residential Landlords Association, said: “This move by the Welsh government will do nothing to help renters who are already struggling to find a home to rent.

“To discourage investment in the market with punitive taxation, at a time when Wales needs many more homes for rent, is a frankly baffling move.

“The announcement will worsen the ongoing shortage of homes, narrow tenant choice, increase rents and cause misery for tenants.”

Tim Thomas, policy and campaigns officer at Propertymark, commented: “Propertymark is disappointed that Land Transaction Tax for additional properties has increased by 1%. The investment in affordable and social homes is welcome, but until social housing supply keeps up with demand, we called for the surcharge on additional properties to be cut to stimulate supply in the private rented sector.

“However, is encouraging that the Welsh government has listened to our call for fair funding for local authorities in Wales given the requirements of enforcing the Renting Homes (Wales) Act and proposed Building Safety Act. This increase in funds must be used for these additional legislative challenges for the housing sector.”

To view the Welsh government’s Budget in full, click here.