Knight Frank says the high-end market in Scotland has slumped as buyers and sellers allow the new Land and Buildings Transaction Tax - the country’s alternative to stamp duty - to take effect.
Buyers paying less than £254,000 for a property will have to pay less LBTT tax than under the old stamp duty system - purchasers of high-end homes will pay considerably more, with purchase costs of a £1.5m home for example rising by some 80 per cent.
While there was a rush of transactions of expensive homes to beat the LBTT introduction in April, since then the reverse has happened. Now Knight Frank says prime country house prices in Scotland rose by only 0.2 per cent in the second quarter.
“The landslide SNP general election victory on May 7 has had a modest impact on the prime property market in the second quarter of 2015 [but] it has been the LBTT which had the greatest bearing” says Oliver Knight, a Knight Frank researcher.
“There was a spike in activity during the first three months of 2015 with the number of sales completed by Knight Frank nearly 50% higher year-on-year. Since then, however, the prime market has been subdued, with the number of sales completed between April and June notably lower than the same period of 2014” he says.
Knight warns there will be more uncertainty to come, adding: “There is likely to be an ongoing period of adjustment at the top-end of the market as individuals factor in the increased cost of moving.”