Savills : The new LBTT is on average 2% lower than the rates previously suggested, but 27% higher than the rest of the UK.
January 23, 2015 at 10:32 am EST
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Land and Building Transaction Tax (LBTT) will replace Stamp Duty Land Tax (SDLT) on Scottish property transactions from 1 April 2015. New rates were announced in the Scottish Parliament on 21st January 2015. Andrew Perratt, Savills Head of Residential Property in Scotland commented:
John Swinney should be commended for listening to the views of Faisal Choudhry, Savills Head of Research in Scotland, and other property specialists. It is good news for home ownership generally that 50% of buyers are now property tax free. However, it remains the case that the already heavily taxed middle classes will be picking up the tab for LBTT (Land and Building Transaction Tax) in Scotland, which could impact the higher end of the market.
There is still a yawning gap between the favourable stamp duty rates for the rest of the UK, introduced by the Chancellor in his autumn statement, and the new LBTT rates, which will be payable in Scotland from April this year.
Scotland is the most 'searched for' location on Savills international website outside London and, despite higher levels of tax, it still offers excellent value compared with London and the south.
For example, around £775,000 will buy a two bedroom upstairs flat in Fulham, including SDLT. The same outlay will buy you a four bedroom Victorian villa with gardens in a comparable Edinburgh suburb, including your LBTT payment. As such, Scotland remains incredible value for money.
High levels of property tax are normally associated with booming markets, but the Scottish property market, though improving, is still fragile.
The new system relies on 8% of buyers for around 75% of its tax take. If there is any slow down at this level it will result in a substantial fall in revenue. It seems inevitable that the threshold for the 5% tax band will have to be extended in line with the rest of the UK.
Notes to Editors
These tax rates and bands remain subject to Parliamentary scrutiny and approval. The Scottish Government will seek Parliament's approval of rate setting orders which will be laid in Parliament in early February.
Savills plc is a United Kingdom-based global real estate services company. The Company operates through a network of offices in the United Kingdom, Europe, Asia Pacific, North America, Africa and the Middle East. The Company's range of services covers various segments, which include residential, office, industrial, retail, leisure, healthcare, rural and hotel property, and mixed-use development schemes. Its businesses include Transaction Advisory, Consultancy, Property and Facilities Management and Investment Management. The Transaction Advisory business stream comprises commercial, residential, leisure and agricultural leasing, tenant representation and investment advice on purchases and sales. Its Property and Facilities Management business includes management of commercial, residential, leisure and agricultural property for owners. Its Consultancy business includes a range of professional property services, including valuation, project management and housing consultancy, and other.
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