Sluggish house sales blamed on tax hikes

HIGH property taxes are putting people off moving to Scotland, warn experts.

Many planning to buy north of the Border change their mind when faced with an extra charge of up to £45,000, according to an estate agent.

In 2015, stamp duty was replaced by the Land and Buildings Transaction Tax (LBTT).

Now buyers pay 10 per cent of the value of a home priced between £325,000-£750,000 and 12 per cent for homes above £750,000. But Carl Warden, senior associate at estate agent Bell Ingram, said the present system was crippling the upper end of the housing market.

He is urging the Scottish Government to reduce the huge tax discrepancy between Scotland and the rest of the UK.

He said: ‘When I meet people who are looking to buy, their jaws hit the floor when they start to appreciate the scale of how much tax they have to pay.’

Mr Warden recently sold a property at £1.15million for which the LBTT was £96,350, compared to stamp duty of £58,750 – a difference of £37,600.

He said: ‘Transactions attracting this level of tax are making people do one of two things; either not move, or negotiate hard on the asking price based on the vendor reducing their price by the level of tax due.’

House-building industry body Homes For Scotland said LBTT was having ‘a disproportionate burden on middle to higher value purchases’.

Scottish Tory economy spokesman Dean Lockhart said the SNP had been warned that high tax rates would lead to a slowdown in the housing market.

He added: ‘We now see the market stagnating in some parts of the country and tax revenues far lower than expected.’

A Scottish Government spokesman said: ‘In setting rates and bands for LBTT, our priority is to help first-time buyers.’

He added that figures for December show the highest monthly level of transactions in the £325,000-£750,000 bracket since the introduction of LBTT.