Call for land tax reform to boost sales

Activity in the housing market is “subdued” in the run-up to Christmas, although experts expect sales to pick up over the next few months, according to a report.

The latest Royal Institution of Chartered Surveyors (RICS) analysis for Scotland found inquiries from would-be new buyers and newly agreed sales were “flat” in November.

However, surveyors believe the market will gain momentum over the next three months and they expect possible Budget changes to bolster the sector in 2018.

The overall findings led to calls from the RICS, ahead of Thursday’s Scottish Budget, for changes to the way the Land and Buildings Transaction Tax (LBTT) operates, with surveyors suggesting the top end of the market is stagnating.

Under LBTT, which replaced Stamp Duty in Scotland, a charge of 12% is applied on sales of homes worth more than £750,000.

According to estate agents, who have criticised the scheme, this means a £1.2 million house in Scotland would be taxed at more than £100,000, compared to around £64,000 in England.

Hew Edgar, RICS policy manager for Scotland, said: “Once again, the most common theme returned from Scotland’s survey respondents involves LBTT and the negative impact it is having on the middle house price bracket and above.

“Reviewing the operation of the current LBTT should be a Scottish Government priority.

“There have been suggestions the Scottish Government will emulate the UK Government and scrap LBTT for first-time buyers.

“While this may stimulate activity, it does not tackle the overarching problem of a lack of suitable accommodation across the housing tenures.”

Surveyors say the top of the housing market is flat.