Property tax change boosts Scottish home sales
- Home sales jump 11% annually in the first year of LBTT, compared to the twelve months before the tax
- However, average house prices are down 7.8% year-on-year, due to a lack of higher value home sales
- House prices hold in April, despite the new LBTT surcharge on buy-to-let properties and second homes
- Uplift in Edinburgh and Clackmannanshire home values, but house prices dip in majority of local areas
Christine Campbell, Your Move managing director in Scotland, comments: “After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year. With 104,344 home sales in the last twelve months, the market has outdone the previous year’s 93,601 sales. These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder. The Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector.
“However, house prices are still down 7.8% year-on-year in April, with a typical home in Scotland now worth £170,667. In part, this drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet. The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period. The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some.
Source: Scotland House Price Index, April 2016