SNP tax is ‘blight’ on housing market

Growing number of sellers forced to drop asking price

A CONTROVERSIAL tax is continuing to ‘blight’ the property market in Scotland, with growing numbers of owners forced to sell their homes below asking price.

A survey has revealed that those trying to sell homes at the top end of the property market are having to lower the asking price, or accept offers of up to 10 per cent lower than originally planned.

Experts say the SNP’s Land Building and Transactions Tax (LBTT) is continuing to negatively impact the sale of homes priced at £1million and above.

Ministers have faced numerous calls to review the tax, which replaced stamp duty in Scotland two years ago.

LBTT makes it significantly more expensive to buy a property costing more than £325,000, while those purchasing properties costing less than £145,000 no longer pay any tax.

This can see £45,000 added to the cost of a house priced at £1million if bought in Scotland rather than in England.

Experts say this change has led to the number of transactions in the more expensive bands dropping, with owners choosing to renovate their own homes rather than moving.

Yesterday the Royal Institution of Chartered Surveyors (RICS) published a report revealing that two-thirds of respondents have seen clients forced to lower the asking price of their homes.

John Brown, of John Brown & Co in Edinburgh, said: ‘Pricing is vital, locations out of main areas are just not selling and inquiries are dropping unless inexpensive below £150,000.

‘LBTT remains a big factor. High costs to purchase stops moving.’

Kevin MacDonald of Graham & Sibbald said: ‘The burden imposed by current LBTT rates continues to blight the upper price sector.’

Chris Hall of Rettie & Co in Edinburgh said LBTT was ‘still an issue at higher values’, while Alexander Inglis at Galbraith in the Borders claimed property sales remain slow in higher bands ‘in part due to LBTT’.

Hew Edgar, RICS policy manager in Scotland, said: ‘The current LBTT bandings are creating a bottleneck in certain areas of the market and encouraging property owners to eschew moving in favour of improving their current properties.

‘The Scottish Government must address this problem by reviewing the LBTT framework and putting in place a structure that would inject some much needed fluidity into the market.’

Scottish Tory finance spokesman Murdo Fraser said: ‘The SNP was well warned about the impact its LBTT changes would have.

‘Now those fears are playing out after the Nationalists yet again decided they knew better than the experts. It’s all very well making changes in favour of those trying to get on the housing ladder. But by penalising those further up the chain, the whole system gets jammed up and everyone suffers.’

The RICS is carrying out an investigation into LBTT and the impact it has had on home sales. So far, it has identified the current bandings of house prices as a main problem with the tax.

A Scottish Government spokesman said: ‘LBTT is more progressive than the Stamp Duty and benefits the vast majority of home buyers. Since the introduction of LBTT, 93 per cent of taxpayers have paid either less tax compared to Stamp Duty or no tax at all.’

Comment – Page 20

‘The SNP was well warned’