Shepherd welcomes scrapping of LBTT for first-time buyers on homes up to £175,000 but warns move will not ease bottleneck in housing market

Shepherd Chartered Surveyors has welcomed the move by Finance Secretary Derek Mackay in his Scottish budget to scrap LBTT for first time buyers on homes valued up to £175,000 but warns that this move is insufficient to ease the bottleneck in the housing market caused by the current Land and Buildings Transaction Tax (LBTT) bandings.

dec17 stuart dunne

Shepherd Chartered Surveyors has welcomed the move by Finance Secretary Derek Mackay in his Scottish budget to scrap LBTT for first time buyers on homes valued up to £175,000 but warns that this move is insufficient to ease the bottleneck in the housing market caused by the current Land and Buildings Transaction Tax (LBTT) bandings.

Mackay raised the LBTT threshold from £145,000 up to £175,000 and claims that some 80% of first-time buyers in Scotland will no longer pay any LBTT, effectively handing them a tax break of up to £600. The move is expected to affect a third of Scotland’s 33,600 first-time buyers.

Stuart Dunne, partner in Shepherd’s Aberdeen office, said: “While this move is welcome, it is unlikely in itself to resolve the challenges facing the housing market caused by the current LBTT bandings.

“While this move may stimulate some first-time buyer activity, if the housing chain cannot move further up the ladder, due to disproportionate LBTT charging, the housing market will remain very challenging.

“Current LBTT bandings are generating fewer revenues than expected as buyers can ill-afford the excessive tax to move house. That’s why I support the mounting industry pressure for reform and would recommend shifting the 10% band to £500,000.”

Shepherd considers the LBTT to be a significant contributing factor to Scotland’s slow housing market and suggests that the current levels of LBTT are causing difficulties for hard-working families who want to move home.

Official figures show property transactions in the top half of the housing market have declined sharply since LBTT was introduced, with homes at the top end of the market – those listed at more than £1 million – seeing the greatest change in agreed prices, with almost 70 per cent reporting sale prices below the asking price.

To address the situation, Shepherd aligns itself with the Scottish Property Federation (SPF) and Royal Institution of Chartered Surveyors (RICS), in calling for reform of LBTT.

Under LBTT, property buyers are charged a percentage based on sale value. The levy is two per cent on purchases between £145,000 and £250,000; five per cent between £250,000 and £325,000; 10 per cent between £325,000 and £750,000 and 12 per cent on properties costing more than £750,000.

The Scottish Property Federation (SPF) has proposed widening the band on which five per cent is paid from £325,000 to £500,000 rather than the 10 per cent band currently set above £325,000.

ENDS

For further information please contact Stuart Dunne on tel 01224 202800

Issued on behalf of Shepherd by Liquorice Media tel 0187 738 2961 www.liquorice-media.com