28 Sep 2017
Policy area: Taxation
The Scottish Property Federation has analysed the latest official figures released by Revenue Scotland, showing Land and Building Transaction Tax (LBTT) revenue has risen in the last month.
Revenues rose in August by £5.2m on July, to £52.8m. This was a jump of £11.6m on the same month in 2016, making it one of the highest total monthly revenues generated from LBTT since the tax came into effect in April 2015.
Residential revenue rose to £28.5m with the second homes tax, the additional dwelling supplement, bringing in £12.1m. If sustained, residential revenue for 2017 (not including the second homes tax) will surpass the £270m of residential revenue raised in the last year of SDLT for the first time since LBTT was introduced.
This improved revenue is a result of a recovery to pre-LBTT levels of sales of residential properties above £325,000, and a further rise in revenue from the Additional Dwellings Supplement ‘second homes’ tax.
LBTT revenue from commercial property sales rose for the first time in five months, standing at £12.5m. However, 2017/18 remains a poor year for commercial LBTT (£65.4m) as the total value of LBTT still lags behind 2016/17 (£67.7m) and 2015/16 (£71m).
David Melhuish, director of the Scottish Property Federation, said:
“The Scottish Government will be pleased to see that over the summer tax revenues from higher value residential sales have returned to pre-LBTT levels. When added to the windfall generated by the second homes tax (ADS), it is clear the government will expect to reach its 2017-18 LBTT revenue targets, even if weighed down by below-par commercial LBTT figures.”
“However, crucially, leading agents are reporting a significant fall in higher value properties coming to market - reducing economic activity and adding pressure on house prices.”
“We strongly believe that if the 10% residential threshold in Scotland is raised from £325,000 to £500,000 we would see more tax transactions, which could further boost to both government revenues and market activity.”
“Whilst the residential figures are showing signs of improvement, the SPF remains concerned that Scotland’s commercial property market sector continues to show low levels of transactions, particularly for investments above £5mn. This is now affecting government revenues with commercial LBTT set to significantly under-shoot its forecasts for the second year running”
Notes to Editor
A link to the SPF’s full report can be found here.
About the Scottish Property Federation
As a membership organisation the Scottish Property Federation (SPF) is the voice of Scotland’s real estate industry. Established in 2007, SPF represents 185 organisations operating in Scotland. We include among our members: property investors including major institutional funds, developers, landlords of commercial and residential property, and professional property consultants and advisers. The SPF works closely with those who advise and decide on public policy in Scotland to ensure that they are aware of the consequences of their decisions for the property industry and wider economy.
As part of the British Property Federation we also benefit from close links with the leading UK property companies and investors in the UK as well as the BPF's contacts with Westminster.
For more information, please visit http://www.scottishpropertyfederation.org.uk or follow us on Twitter @ScotPropFed.