Changes to LBTT - The Scottish Budget

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The draft budget is out... What does this mean for LBTT?

As you may have heard the Scottish Government announced its draft 2018-2019 Budget on 14 December 2017.

The draft Budget includes the proposal to introduce a new relief on LBTT (the Scottish Stamp Duty) for first time buyers in Scotland which would increase the zero-rate threshold from £145,000 to £175,000.

So, pretty much following what the Westminster Budget has done for south of the border.

For those first time buyers who will qualify for the relief that would be a saving of up to £600. That is surely good news to first time buyers but does it really go any way towards solving the bigger problems?

A lot of people have been arguing that the Scottish Government should change the rates for LBTT and also for ADS (the Additional Dwelling Supplement) which is a 3% tax for investment properties and second homes. Their arguments are that these are damaging the property market higher up than the first time buyer level and there is ample evidence of this. After all, the argument goes, if first time sellers are reluctant to sell because of the costs involved, that does not free up those first time buyer properties which we would usually see coming onto the market in greater numbers. But there was no mention of any proposed changes in the draft Budget.

Also, in Edinburgh particularly, we have seen massive price rises in property in 2017. Many properties which are within the budget of first time buyers have been selling for 10% and more over their home report values. Sometimes considerably more than 10%. The reason is the shortage of supply of affordable properties that have come onto the market in Edinburgh in 2017.  The Edinburgh property market in 2017 has been a classic instance of supply and demand where demand has outstripped supply. Perhaps 2018 will see a levelling out of supply and demand although there are no signs of that at the moment. We shall need to wait and see.

It has to be pointed out that this new relief for first time buyers is not yet available. The draft Budget will need to be approved. We should have more information in January.

 


Passionate about property and providing great service at value for money.

Cameron Stephen
Partner with Cameron Stephen & Co. solicitors and estate agents, Edinburgh
cameron@cameronstephen.co.uk
0131 555 1296

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