Property tax putting off potential foreign buyers, warns agency
SCOTLAND’S new property tax is deterring foreign investors from buying luxury homes in the country, it has been claimed after two major deals fell through.
Terry Winters, 74, was looking to buy a Georgian Mansion with panoramic views of St Andrews Old Course.
But he was deterred when he learned the deal would cost him £162,000 in property tax – about £50,000 more than if he had bought a similar property down south.
Even the unique location and views of the home of golf wasn’t enough to appease the golf fanatic from Scottsdale, Arizona.
The prominent businessman wanted to buy a holiday home in Scotland but the Land and Building’s Transaction tax that was brought in to replace Stamp Duty proved to be a major stumbling block.
He said: “If this tax is meant to discourage foreign investors and depress property prices, then it’s doing its job.
“The prospect of being landed with such a huge tax bill up front was a dealTHE breaker and many others.
“It made me feel my investment wasn’t wanted. I’ve worked hard to build my wealth.”
His comments will renew concerns that the tax, which replaced UK stamp duty in Scotland in April 2015, is limiting property sales and damaging investment.
The tax means buying a property in Scotland is typically more expensive than in England or Wales.
Someone buying a £1 million property will pay more than £78,000 due to the Scottish property tax compared to it will be for £43,750 in stamp duty south of the Border.
On Thursday, an American investor pulled out of a £850,000 deal to buy Drumkilbo House near Blairgowrie in Perthshire after learning the tax bill would be £60,350, nearly double what it would be down south.
Jamie Macnab, from Savills estate agent, which was selling the property, said: “Everything had been agreed, then the buyer was told how much LBTT was going to be and he was in complete shock.”
He also described the tax as ruinous and called for an urgent review to help kickstart the top-end of the property market.
He added: “We are hoping the Scottish Government will review this. The tax hits the professional classes the hardest, those who have worked hard and saved to buy a home in the £750,000 to £900,000 bracket.
“They simply cannot afford to move. This has negative implications on the mobility of Scotland’s workforce.”