14 Aug 2018
A seasonal upturn in property market activity has delivered a significant boost to Scottish Government revenues, generating the third highest monthly return since the Land and Buildings Transaction Tax (LBTT) was introduced - and a welcome uplift for the Government after figures for April and May failed to meet heightened expectations.
According to the latest figures reported by Revenue Scotland and analysed by the Scottish Property Federation, revenues from LBTT in June 2018 hit a total of £57m, which is over £14m more than May’s total and more than £13m up on June 2017.
The largest increase in revenue came from the commercial property sector, which in total generated £21.8m. This is £8.1m up on May 2018 and £10.7m up on June 2017.
The residential element of LBTT generated £24.1m in June 2018 – a rise of £4.7m on May’s figures and £0.8m up on June last year.
The additional dwelling supplement continues to play a strong role in the overall figures and increased in June to £11m.
The Scottish Government’s draft budget expects that LBTT will generate £588m in total during 2018/19, an increase of £25m (4.5%) on the 2017/18 LBTT revenue total.
David Melhuish, Director of the Scottish Property Federation, said:
“This year, the Scottish Government expects to see a 17.5% annual increase in revenue from the residential sector, and a slight drop in revenue from the commercial property market.
“However, in the first three months of this tax year to June, we have seen revenues slightly underperform against the Scottish Government’s expected trends for the main residential market. Despite a good month in June for the Government, residential LBTT revenues fell below 2017/18 levels in both April and May, but with some of the busiest months for the residential market still to come the Government will have an opportunity to make up ground.
“Meanwhile, the commercial market is showing initial signs of being better than forecast and so far, this year has generated just over £10m more than in the same period in 2017/18. The additional dwelling supplement also continues to deliver better than expected revenue for the government, albeit with some 19% now refunded to taxpayers since its introduction in April 2016.
“For now, it will be steady as it goes for the government, but there is considerable dependency on the £325,000 to £750,000 residential market band, which supports nearly 60% of residential LBTT revenue, based on less than 10% of the total number of sales. Should this section of the market stall, as in 2015/16, then there could be a significant impact on revenue.”
Notes to Editors
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.
For further information please contact Colin McFarlane or Elizabeth Lambley on 0131 554 1230.
14 August 2018