Shepherd considers LBTT to be a contributing factor to the North East of Scotland’s slow housing market
Shepherd Chartered Surveyors considers the Land and Buildings Transaction Tax (LBTT) to be a significant contributing factor of the North East of Scotland’s slow housing market.
As the local economy recovers from the recent downturn in the Oil and Gas sectors and property values stabilise the current levels of LBTT are causing difficulties for hard-working families who want to move home.
Stuart Dunne, partner in Shepherd’s Aberdeen office, said: “Despite the well-publicised fall in property values in the North East the average house price is still higher than the Scottish average. The average price of a detached family home in Aberdeen is in excess of £300,000 so that an additional LBTT levy of 10 per cent on transactions over £325,000 represents a further challenge to the market.
“While LBTT has helped first-time buyers and others at the lower levels of the housing market, consideration to review the current bandings is needed to prevent the average family being hit by taxes at a time when moving home itself is a very expensive under taking.”
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, starting from £145,000. 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. Stuart Dunne said: “The present LBTT bandings are creating a bottleneck in the housing market. Some property owners favour making improvements to their homes rather than a move while others who wish to move simply can’t afford the LBTT levies. “Widening the band on which five per cent is paid to £500,000 would help return some much-needed fluidity to the housing market.”
Finance Secretary Derek Mackay has indicated that he was willing to consider raising the upper limit of the 5% band to £500,000, thereby easing the tax burden on many homebuyers in the middle of the property market. If the change is carried out, it could provide an average saving of £9,000 to affected buyers.
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
Date 25 September 2017