£1million mansion sales scuppered by SNP property tax

A CONTROVERSIAL SNP tax has stifled the top end of the property market – leaving homeowners forced to rent out their houses rather than sell, according to an expert.

Sir Timothy Noble, founder of merchant bank the Noble Group, claims buyers looking for homes over £1million are moving less after the introduction of the land and buildings transaction tax (LBTT).

He also warned that Scotland’s most expensive homes are plunging in value, with owners forced to slash property prices because the rate had made them ‘almost unsellable’.

LBTT means it is now significantly more expensive to buy homes costing over £325,000 in Scotland, while those purchasing properties less than £145,000 no longer pay tax. It can mean an extra £45,000 is added to a £1million home bought here rather than in England.

Analysis of official figures shows the stamp duty replacement, introduced in 2015, has raised £100million less than forecast for the 2016/17 financial year.

Sir Timothy said: ‘Expensive houses in areas of Edinburgh such as Colinton, the Grange and Barnton have fallen in value by 25 per cent and have become almost unsellable. The property tax is a major element.

‘I am aware of several large houses being rented out rather than being sold because the owners were unable to sell.’

Property and finance experts have warned LBTT could cut the number of professionals from the rest of the UK and overseas who are buying property in Scotland.

During a consultation period before LBTT’s introduction, Sir Timothy told Scottish ministers it would be a ‘double tax’. He said: ‘The owner will effectively pay it on selling an existing house (because the buyer will reduce his price in light of the tax he is required to pay) then again on buying a different house.’

The SNP did not change LBTT rates and thresholds in its Budget for 2017/18, approved in February.

This means the tax will continue to jump from 2 per cent to 5 per cent for homes worth £250,000 to £325,000, 10 per cent from £325,000 and 12 per cent above £750,000.

Last year, the Scottish Government admitted LBTT will bring in £793million less than forecast from standard residential sales over the next four years.

The Scottish Government said: ‘Evidence from Registers of Scotland and Revenue Scotland shows sales and revenues in the part of the market between £325,000 and £750,000 are not performing any differently relative to the market under £325,000.

‘Registers of Scotland’s recently published data shows the number of transactions above £1million recorded in the first nine months of 2016-17 was 11 per cent higher than the same period in 2015-16.

‘Our priority for LBTT is helping first-time buyers enter the market and assisting people as they progress through the market.’

Yesterday, Scottish Tory finance spokesman Murdo Fraser said: ‘The SNP needs to realise the damage LBTT rates are causing and lower them before our economy is hurt further.’

‘Owners were unable to sell’