The Scottish Property Federation (SPF) has welcomed proposals for new LBTT rates which will ensure that above average residential property transactions (those between £250,000 and £325,000) will no longer be subjected to an immediate LBTT rate of 10% within this band.
Scottish Finance Secretary John Swinney proposed the following rates for homes over £250,000:
The SPF is particularly pleased to see the intermediate 5% rate band added, a rate SPF Chairman John Hamilton recommended when he gave evidence at the Scottish Parliament's Finance Committee on LBTT rates and thresholds at the end of 2014. This will help to provide a smoother tax rise for families seeking to move into larger and more valuable properties.
The organisation has welcomed the new thresholds as a boost for not just homebuyers, but the wider property industry as well, as it will mean that the Scottish residential market will not be disadvantaged by selling homes with higher tax bands than their UK counterparts. The organisation pointed out that this is particularly important for those who are just starting out in property development, and who could have faced much higher taxes as they start out on small scale residential schemes.
It also welcomed an increase in the threshold for properties that will be excluded from LBTT together, which has been raised from £135,000 to £145,000, which will be a further boost to Scotland’s homeowners, particularly first time buyers and the wider property industry.
Although pleased at the impact that this is likely to have on the residential market, the SPF still harbours concerns that the highest rate of LBTT for the commercial property sector is too penal, and could cause Scotland to suffer a competitive disadvantage as it seeks to attract property investment.
David Melhuish, Director at the Scottish Property Federation, commented: “Today’s announcement is excellent news for the majority of homeowners, who will not face steep rate rises as they move into larger or more valuable homes at the £250,000 - £325,000 threshold. It will also help support house sellers, by ensuring that their product is competitive. A further group of people who will benefit from this is budding property developers, who will often cut their teeth on small-scale residential projects, and therefore should not be unduly penalised by the LBTT system.”