Your Move claims the higher end of the Scottish housing market is recovering from the introduction of Land and Building Transaction Tax as a more steeply progressive alternative to stamp duty.
LBTT was introduced in April 2015 and while it is significantly lower than the old stamp duty rates for homes below around £350,000 it then becomes much higher. This impacted particularly on £1m-plus sales north of the border for much of 2015.
However, Your Move suggests this is now changing.
“As high-end housing stock starts to shift again, we are seeing price rises strengthen in more expensive areas – with values in East Renfrewshire up 5.2% since October, the fastest monthly jump on the mainland” says the agency’s Scottish director Christine Campbell.
“This region illustrates the recovery in the top end of the market with 30 sales of properties worth over half a million pounds in the last three months, a significant improvement on 18 sales in the same period last year” she says.
The most notable of the sales was a nine bedroom property going for £2.6m – the second most expensive property sold this year.
In the wider sales market, Scotland is exceeding the rest of Britain for price growth.
During November, Scotland’s 0.8 per cent increase in property prices represents twice the pace seen in England and Wales over the same month, according to the agency’s data.
But Campbell warns this month’s growth spurt may be short-lived.
“With [Scottish finance minister] John Swinney’s three per cent surcharge on second home and buy-to-let property purchases coming into force in April, price rises could find themselves hindered. If the impact of this tax increase mirrors the effect of the LBTT, we may see a sharp spike in values at the start of 2016, as buy-to-let buyers rush to avoid the tax hike, followed by a sudden dip after its introduction” she warns.
She believes investors may be dissuaded from purchasing additional properties then, with a £250,000 home liable for an extra £7,500 in the LBTT surcharge once the tax is implemented.
Sellers may find themselves having to subsequently reduce prices to make their properties more attractive, accounting for the higher surcharge for some buyers. There have been cases of some developers offering £10,000 contributions towards the existing LBTT in order to sell their units.