House prices hammered as SNP property tax hits home

SCOTLAND is the only UK region to have suffered a slump in house prices, prompting fears the SNP’s property super-tax is wrecking the market.

Estate agents across the country have warned of a si gnificant slowdown in middle- class house sales due to the Land and Buildings Transaction Tax (LBTT).

They spoke out yesterday as the Office for National Statistics (ONS) reported a 0.2 per cent fall in Scottish house prices in the year to December 2015.

While Scotland’s housing market slumped, England is celebrating a 5.1 per cent surge in prices – even when the London property bubble and affluent South-East are stripped out.

It has prompted fears that Finance Secretary John Swinney’s move to hike tax higher than England for all properties above £325,000 has dealt a hammer blow to middle Scotland.

Sandy Burnett, partner at Edinburgh estate agent Murray Beith Murray, said: ‘The middle market is falling off. Families who wanted to move up the ladder are suddenly being told what they have to pay in tax. Young families needing a family house are having to think about what to do, and whether they need to move out of Edinburgh to areas like North Berwick for somewhere cheaper.

‘Older people who are downsizing are struggling to find people to buy their houses, so can’t get their money out of their property for their retirement.’

Mr Burnett saw a flurry of homes selling for more than £1million before LBTT – the first tax levied by a Scottish government for more than 300 years – replaced stamp duty last April, but has since handled few sales at the upper end of the market.

The ONS figures put the average house price in Scotland at £193,000 for December 2015, down 0.2 per cent on the previous year. No other country or region of the UK recorded a fall.

In most parts of Britain, the property market has recovered from the economic crash of 2008. While England’s property prices are 21.5 per cent higher than their pre- downturn peak in January 2008, Scotland’s are still almost 2 per cent below their peak in June of that year.

Alan Watt, owner of property agent Hamilton Watt in Aberdeen, said it was not only affluent buyers put off by the tax, with many properties on new estates costing more than £325,000 for an average family home. He added: ‘The Scottish Government has put a severe brake on the housing market.’

Scottish Tory leader Ruth Davidson called for 100,000 homes to be built during the next parliament, as her party’s housing spokesman Alex Johnstone said LBTT ‘punishes aspiration’.

A Scotti s h Government spokesman said: ‘As the Bank of Scotland Homemover Review confirmed only last week, the introduction of LBTT increased the number of house moves by 3 per cent last year to reach their highest level since 2008.

‘Registers of Scotland data published two weeks ago showed a 14.5 per cent increase in the volume of residential sales.’

INFLATION reached its highest level in a year in January because of changes in the cost of alcohol, clothing and fuel.

The Consumer Price Index edged up 0.3 per cent in the 12 months to January compared with 0.2 per cent to December.

‘Severe brake on the market’