Stamp Duty Land Tax: Consultation on the Potential Impacts of Devolving to the National Assembly for Wales and Welsh Government

About the Federation of Master Builders

The Federation of Master Builders (FMB) is both the UK and Wales’ largest trade association in the building industry. Established in 1941 to protect the interest of small and medium-sized building firms, the FMB is independent and non-profit making, lobbying continuously to protect and promote members’ interests.

Our stance on the devolution of Stamp Duty Land Tax to Wales

After consulting with our members, the FMB strongly supports the devolution of Stamp Duty Land Tax (SDLT) to the National Assembly for Wales (NAW) and the Welsh Government (WG). Devolved government in Wales is responsible for housing development in Wales and must therefore be given control of the economic levers that affect this policy area. Further reasons for our stance are:
Governmental accountability

Devolved government in Wales is currently unique in that it takes no responsibility in raising the money it spends. By making the NAW responsible for raising some of this money, it also lands responsibility on it to ensure that the tax base where the money is raised from is in good stead. In relation to SDLT, devolving it would have the potential of further incentivise the NAW to encourage more transactions in the housing market, which in turn would benefit the construction industry and the housing market in Wales.


It has already been recommended by both Holtham and Silk

Both the Holtham Commission and the Silk Commission have already advised that STDL should be devolved to Wales. Both made this recommendation after consulting in-depth with all interested parties. Why are we questioning the recommendation of both?

An opportunity to adapt STDL to suit the Welsh housing market
The housing market in Wales operates in a very different environment to the market in England. Average house prices and land value is lower and the main levers that affect the housing market and the construction industry such as planning and building regulations are in the hands of different legislative bodies.

Question 1: How significant would the potential positive or negative impacts be on the construction industry and housing market?

We believe that devolving the tax has the potential to have a positive impact on the construction industry and housing market in Wales. The central case against SDLT in its current form is that it hampers household mobility. Lack of household mobility in turn has a negative impact on the construction industry and housing market. Admittedly there are other more influential factors that affect household mobility than SDLT, but the tax does play a minor role in acting as a disincentive for people to move house.

The FMB would like to see the NAW get rid of the system we currently have where rates are applied on the whole taxable amount rather than on the amount above the threshold. As an example, a house sold for £250,000 attracts £2,500 in SDLT, whereas a £250,001 house pays £7,500. This “slab” basis of taxing has a distorting affect on the housing market because it is very difficult to sell at prices just above the thresholds. It would be much fairer to use a more progressive tax whereby property sold above the first threshold but below the second would be charged only the tax on the amount which is over the first tax threshold.

If the tax was to be devolved, the FMB would encourage the National Assembly to make it a priority to use the new power to increase the number of transactions taking place, which could potentially give the construction industry and housing market a much needed boost rather than to view it as simply a way of making money.

Question 2: What would be the likely impact on investment and business location decisions that might result from different property transaction tax regimes in England and Wales?

It would have very little impact if at all. The decision on where to set up a business or where to invest is dependent upon many factors such as the nature of the labour market. However minor changes in SDLT would be very low down the list of factors influencing such decision.

Question 3: How significant would the potential administrative burdens be if there were different property transaction regimes and collection authorities in England and Wales?

The fact that SDLT is charged on an immovable object and that it is a single transaction makes it one of easiest to collect and would therefore add very little administrative burden.

Question 4: What impacts would devolving SDLT have on the Welsh and English economies, particularly in border areas, and what would be the extent of those impacts?

It is a tax on immovable objects and therefore would not impact on cross border activity.
Devolution has resulted in many differentiations in policy areas between England and Wales. This applies to border areas as much as it does to non-border areas and is a natural result of devolution.