Homes sales slide as new tax kicks in

SCOTLAND’S property market has been hit by a controversial SNP tax.

The number of people moving house dropped following the introduction of the land and buildings transaction tax (LBTT).

Experts have warned that LBTT, which replaced stamp duty in Scotland last year, has stifled the country’s property market, with critics claiming the tax has had a ‘negative impact’ on sales.

Yesterday, the Council of Mortgage Lenders (CML) revealed the number of home movers had dropped by 8 per cent compared with the same period last year.

It said those who are moving borrowed £1billion in the last quarter – down 6 per cent on the same time last year.

CML Scotland chairman Carol Anderson said: ‘The decline in home mover activity is not unexpected, given the surge last year to avoid changes in land and buildings transaction tax, but we expect home buying activity to gain momentum in the summer months.’

LBTT was introduced two years ago and means it is now significantly more expensive to buy homes costing more than £325,000, while those purchasing properties costing less than £145,000 no longer pay any tax.

The rate means an additional £45,000 is added to the cost of a house priced at £1million if bought in Scotland rather than England.

Scottish Conservative finance spokesman Murdo Fraser said: ‘The fact that an annual fall for home mover lending has been recorded is a genuine cause for concern.

‘The SNP now needs to start listening to those professionally

‘SNP needs to start listening’

involved in property and cut LBTT rates at the higher bands if we are to have a healthier and more stable housing market.’

It was recently revealed that the tax is likely to bring in tens of millions of pounds less than predicted, which could see taxpayers forced to help plug funding gaps in the Scottish Government’s budget.

The Scottish Property Federation found that the tax had generated revenues of £481million in 2016-17, almost £57million below the Government’s forecast.

The CML report yesterday revealed that while the number of home movers has dropped, the number of first-time buyers has increased in the past year.

Although compared with the previous quarter the number of loans had dropped, the year-onyear results show a 23 per cent increase.

Homes for Scotland chief executive Nicola Barclay said: ‘While it is great to see firsttime buyer activity up on the same period last year, today’s figures also highlight an annual fall for home mover lending, which raises concerns given the need for a healthy housing market across all segments.’

A Scottish Government spokesman said: ‘LBTT is more progressive than the Stamp Duty it replaced, and benefits the vast majority of home buyers. As these figures make clear, first-time buyer and total house purchase activity have grown on an annual basis in the first quarter of 2017.

‘Transactions at the upper end of the Scottish residential market above £325,000 have been maintaining their share of the overall market since the introduction of LBTT.’