First-time buyers beware
It could cost £4,600 more to get on the Scots ladder
FIRST-TIME buyers in Scotland may have to pay thousands of pounds more tax than those in england from next year.
In one of the biggest announcements in yesterday’s Budget, Philip Hammond removed stamp duty from first homes costing less than £300,000.
But the huge tax cut will not apply in Scotland, where all buyers of properties above £145,000 have to pay a 2 per cent tax, rising to 5 per cent on those above £250,000. Scotland’s first-time-buyers will still have to pay £2,100 on a £250,000 home and £4,600 on a £300,000 one, while those in england pay nothing.
The huge gap has sparked calls for the SNP to reform its Land and Buildings Transaction Tax (LBTT), which replaced stamp duty north of the Border in 2015.
mr Hammond said first-time buyers in high-price areas such as London would pay no stamp duty on the first £300,000 of a property costing up to £500,000.
He told MPS: ‘That is a stamp duty cut for 95 per cent of all firsttime buyers who pay stamp duty and no stamp duty at all for 80 per cent of first-time buyers from today.
‘When we say we will revive the home-owning dream in Britain, we mean it. We do not underestimate the scale of the challenge, but today we have made a substantial down-payment.’
Previously, all buyers of £200,000 homes in england paid £1,500 in stamp duty, rising to £5,000 for those costing £300,000.
The average house price in Scotland is currently £176,231, according to Registers of Scotland. It means many first-time buyers north of the Border will lose out, having to pay LBTT.
The LBTT rates – which make it significantly more expensive to buy homes worth more than £325,000 in Scotland – have been blamed for a slowdown in the middle to top end of the Scottish property market and have blown a £54million hole in the budget by raising less than ministers expected.
mr Hammond’s move was criticised by the independent Office for Budget Responsibility (OBR), which said the move would simply push up house prices.
And Gail Hunter, director of the Royal Institute of Chartered Surveyors, said: ‘Scrapping Stamp Duty for first-time buyers may stimulate activity at a time when the market is subdued.
‘However, this does not tackle the underlying problem and is something of a distraction from the need to increase supply.
‘Whilst the LBTT framework in Scotland already supports firsttime buyers, it will be interesting to see if the Scottish Government recognises the inhibitive nature of the current LBTT framework and makes suitable amendments to the LBTT banding structure which will encourage market fluidity in all price brackets.’
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: ‘The abolition of stamp duty on properties up to £300,000 for first-time buyers invites a response from Scottish ministers.’
However, Finance Secretary Derek mackay yesterday signalled that he would not make such changes in Scotland.
He said: ‘On business rates and stamp duty, the UK Government are following our lead.
‘We have already moved to make revaluations more frequent and the vast majority of first-time buyers are already exempt from tax when they buy a home.’
‘A substantial down-payment’