Cut property tax ‘or risk market collapse’

SCOTLAND’S housing market may collapse if Holyrood refuses to match the UK Government’s property tax cut, experts have warned.

Yesterday’s announcement by the Chancellor, Rishi Sunak, confirmed that house sales up to £500,000 in England and Northern Ireland will be exempt from stamp duty until March.

The move is designed to reignite a market in danger of suffering long-term damage due to the pandemic and will see 90 per cent of buyers save an average of £4,500 each.

Last night, the Scottish Government remained insistent that it has no plans yet to create a holiday period for its Land and Buildings Transaction Tax (LBTT) even though sales in May were around a third of their usual volume.

However, industry experts claim that ministers’ stubbornness is courting disaster. David Alexander, of property management company Apropos, said: ‘Scotland must follow suit if we are to face a level playing field and encourage homebuyers to continue to engage with the market during these difficult economic times. Maintaining the momentum of the property market is crucial in the months ahead to reduce the likelihood of a collapse.

‘Scotland must be able to compete equally in the future growth of the economy and I hope the Scottish Government responds quickly to unify the property tax levies.

‘They must act to ensure Scotland emerges from this period of economic uncertainty as strong as the rest of the UK.’

There are already wide disparities between stamp duty and LBTT. Those buying a property costing between £125,000 and £145,000 pay less tax in Scotland. But first-time buyers in England and Northern Ireland are exempt from the duty for homes up to £300,000, whereas the threshold in Scotland is only £175,000. Those buying properties in the range £325,000 to £1.5million have been hit with bigger bills north of the Border.

Registers of Scotland data shows that the housing market has suffered during the pandemic.There were no sales at all during April and just over 3,000 in May, when there are typically nearly 9,000.

A Scottish Government spokesman said: ‘As the First Minister has made clear, we will consider the detail of the UK Government’s announcements and their impact on Scotland first then set out our response.’