The Scottish budget statement, delivered by Derek Mackay on 14 December 2017 confirmed that the zero band for LBTT transactions will increase to £175,000 as of June 2018.
Warners' Operations Director, David Marshall assesses the potential outcomes of the changes to taxation.
"Anything which can reduce the financial burden on first-time buyers, such as the announcement in today’s draft budget, is of course welcome.
"Yet the way in which the roll-out of the tax relief is being proposed runs the risk of causing short-term disruption to the market. Generally speaking when changes to property tax are announced, they are introduced very swiftly thereafter to avoid people changing the timing of their purchase to reduce how much tax they pay - and sending an unwelcome shock through the market.
“The situation has been very challenging for first-time buyers over the last 18 months as typically they have faced a lot of competition at closing dates and found themselves priced out of the market. This situation has been exacerbated by the fact that most lenders will only lend up to the valuation figure in the Home Report meaning that if you want to offer any more than that, you will need to have the upfront cash available to do so. Many first-time buyers simply don’t have the savings to do this and with 75% of properties selling for above valuation, the market has been incredibly tough for those looking to get onto the ladder.
"By announcing the changes now but not bringing the tax relief into force until June next year there is a danger that some first-time buyers will opt to wait until after June to buy a home. This will inevitably have a negative impact on sellers in the £145,000-175,000 bracket, reducing demand and potentially delaying sales.
"It’s unclear on initial reading why, if the revised tax banding for first-time buyers is already known, six months of consultation is required before bringing it into force. The one thing that no market likes is a lack of clarity and the manner in which things have been announced could cause uncertainty for buyers and sellers alike.”
If you have a property in Edinburgh and the Lothians which you are thinking of selling, or have any questions about buying and selling in general, feel free to get in touch today on 0131 667 0232 or by emailing email@example.com and one of our friendly team will be delighted to help.