LAND & BUILDING TRANSACTIONS TAX (SCOTLAND) BILL

I was interested to hear about the legislation passed by MSPs replacing the UK Government system of Stamp Duty Land Tax in Scotland with the Land and Building Transactions Tax.  The LBTT has been described as part of the Scottish Government’s plan to implement a progressive tax structure where the amount of tax paid is more closely related to the value of the property.  I think that there are a number of questions still to be answered including the rates and also other scenarios, i.e. partnerships etc.  I think the real bonus is that it will get rid of the distortions caused by the stepped approach in Stamp Duty where a difference in selling price of £1 could lead to an extra tax burden in the thousands of pounds.  Anything that helps the housing market is welcome in my book and I would also urge both Scottish and UK Governments to look at Capital Gains Tax in relation to property transactions, in particular the sole or main resident relief, which I think should be graded with any extra taxes raised being used to fund a Government backed mortgage relief scheme. I will report as soon as I have more details on the LBTT.

 

 Lindsay Darroch
Partner & Head of Property

First time buyers number up

Recent data from LSL Property Services shows that first time buyer numbers rose 15% in April  – up 2,900 from March. The more interesting trend was that 9,600 more first time buyers secured mortgages in the first four months of 2013 than in 2012. I think this is a positive sign and points to further improvement in the housing market. I would caveat those figures by warning against complacency as there is still a long way to go before we have a normal free flowing market. However, I think these signs are encouraging.

In relation to the Blackadders Property team, I can advise that May was a record month for new houses coming on the market and sales continued to out perform last year and be well ahead of our targets for this year. Focusing on Broughty Ferry, I am noticing a surge of interest in properties in the £450,000 to £550,000 bracket. The people selling tend to be, in the vast majority of cases, older people who are now wishing to down-size the family home. They are correspondingly looking at properties more associated with older people i.e. bungalows, ground floor flats, etc. which are also showing an increase in interest and price.

I am hoping that with the increase in the middle to top end and the increase in first time buyers, we will start seeing a more free-flowing property market leading to more confidence in the housing market and ultimately more bank lending to developers. An increase in activity in the construction industry will have a positive impact on the whole economy. In this regard, I have had a number of positive discussions with leading mainstream lending institutions who are certainly more willing to look and discuss funding, development and property investment opportunities – albeit with a very strict criteria.

Lindsay Darroch
Partner & Head of Property