Middle market set to benefit from new property tax rates for Scotland

Taylor Scott International News

Changes to the rate of property tax payable in Scotland from April have been confirmed with the middle sector of the market benefitting. From 01 April under the Land and Buildings Transaction Tax (LBTT) the zero threshold has been raised to £145,000 and other band adjusted. Some 2% will be paid between £145,000 and £250,000, a new band of 5% will apply to properties between £250,001 and £325,000. There is then a jump to 10% for those buying homes between £325,001 and £750,000 and high value properties over £750,001 will be taxed at 12% under the review by Finance Secretary John Swinney. It is disappointing news for buyers and sellers of Scottish homes, according to estate agency Strutt & Parker. It said that while the changes may well boost the market for first time buyers and the lower end of the sector, they are far from offering the hoped for stimulus to the middle of the property market. ‘While LBTT will help first time buyers, the average price of a house in Scotland is £170,000. It has been widely derided as an unfair attack on families and a punitive tax on aspiration, particularly in the affluent centres of Glasgow, Edinburgh and Aberdeen and the changes announced are no better,’ said Andrew Rettie, head of estate agency for Strutt & Parker in Scotland. ‘Strutt & Parker backed the Scottish Conservatives' proposals for the introduction of a mid-tier rate of 5% between £250,001 and £500,000 and we were hopeful that Swinney would introduce something along those lines but while this review offers a concession to the lower end of the market it is a blow to everyone else and a missed opportunity to provide a fillip to the property,’ he pointed out. ‘If families can't upsize because of the increase in tax, they will not sell, leading to a stalemate in the middle of the market, which is really the engine room of a thriving housing sector,’ he explained. The firm is currently very busy at present with buyers and sellers aiming to complete deals before the April deadline. ‘However, once LBTT comes into effect we anticipate buyers will be more cautious in their offers to take account of the heavier tax burden,’ added Rettie. CKD Galbraith, an independent property consultancy, said the changes may have significant implications for the Scottish housing market. ‘There are winners and losers amongst property buyers and sellers,’ said partner John Bound. ‘While there is good news for first time buyers and those at the lower end of the property market, transactions carried out at the mid to higher end will still trigger a significant tax bill. While there are savings for some on what was originally proposed by the Scottish Government there will be increases on what people have been paying to date,’ he explained. ‘This will affect a large section of houses in the Scottish market and overall we estimate that there… Continue reading →

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