Lifeline for the property market as Forbes forced into climbdown
SNP bows to pressure with temporary tax cuts on sales
SCOTLAND’S crisis-hit property market has been handed a lifeline after SNP ministers bowed to pressure over tax cuts.
Finance Secretary Kate Forbes yesterday announced that she will introduce a temporary cut to the levy on home sales, mirroring a move by the UK Chancellor Rishi Sunak.
It means Scots will not pay land and buildings transaction tax (LBTT) on properties priced up to £250,000 after the threshold for the charge is raised from £145,000.
Miss Forbes said this would result in eight out of ten house sales in Scotland becoming exempt from the charge.
She had been facing considerable pressure from industry bodies to help stimulate the property market after Mr Sunak unveiled a package of measures in his summer statement.
Although welcoming her announcement, industry leaders urged Miss Forbes to say when the changes will come into force, claiming her failure to set out a timeline is ‘unhelpful’ and ‘leaves uncertainty’.
As part of a £30billion package to boost the economy, Mr Sunak announced a stamp duty holiday on transactions in England and Northern Ireland on homes of up to £500,000. He also announced a series of other measures, with VAT for the hospitality industry to be slashed to 5 per cent and a £1,000 incentive for businesses to keep furloughed staff on.
While these two measures apply UK-wide, Scotland will also benefit from an £800million budget increase in funding under the Barnett formula from a number of changes in devolved areas – such as training and apprenticeships.
Housing and residential taxes are also devolved to Holyrood, leading to calls for Miss Forbes to take action to mirror the stamp duty holiday.
Despite initially insisting there were no plans for a similar move, Miss Forbes has now announced the concession on LBTT.
However, she admitted this will not come into effect immediately for ‘administrative reasons’, though pledged to implement it as soon as possible.
Legislation is needed before the changes can be put in place.
Miss Forbes will also spend an extra £50million on the ‘first home fund’ scheme which helps first-time buyers.
Speaking at the Scottish parliament yesterday, she admitted she had bowed to pressure, saying she had listened to calls to ‘raise the starting threshold for LBTT to help stimulate the housing market and economy’.
She also said that she would be taking a ‘distinctive approach’ to help first-time buyers.
Although the threshold for LBTT will be raised from £145,000, the banding will remain the same – meaning that the sales levy on houses costing more than £250,001 will continue to be 5 per cent.
Miss Forbes’s LBTT concession will not apply for those buying second homes.
She said: ‘Eight out of ten people purchasing a home in Scotland will be taken out of LBTT, and all home-movers purchasing a home about £250,000 will be £2,100 better off. This is a blanket measure and one which may not help firsttime buyers, so I am announcing further targeted support for those who may be most concerned about making such an investment at this time.’
She committed an extra £50million to the first home fund, a shared-equity scheme to help
‘Leaves uncertainty in the short term’ ‘Unprecedented UK spending’
first-time buyers. Amid the lack of clarity on when the LBTT concession will be implemented, Scottish Conservative housing spokesman Graham Simpson said there ‘remains a significant disparity’ between the support offered by Miss Forbes and that south of the Border. Fionna Kell
director of policy for building industry organisation Homes for Scotland, said: ‘On LBTT, it is absolutely crucial we get an early date for implementation, otherwise we are at risk of seeing an already fragile market recovery stall as buyers delay purchases.’
Jacqueline Law, managing partner at Aberdein Considine, Scotland’s largest solicitor estate agent, said: ‘The cut in LBTT is welcome and will lift a number of people out of tax altogether.
‘However, after 14 weeks of the property market being limited by lockdown, not naming a date for the tax change is unhelpful and leaves uncertainty in the short-term.’
After Mr Sunak’s announcement on wednesday, it was revealed Scotland will benefit from an extra £800million in funding – taking the total the country has received from the UK Government during the pandemic to £4.6billion.
Pamela Nash, chief executive of Scotland in Union, said: ‘The reality is that Scotland’s economic share of the measures announced this week could be as high as £1billion.
‘Nationalists need to stop conflating their party with the country. As part of the UK we are benefiting from unprecedented UK spending in Scotland which is supporting hundreds of thousands of Scottish jobs.
‘Rather than trying to stoke division, the SNP should focus relentlessly on economic recovery and our cherished NHS.’