The proposed rate change in Stamp Duty Tax in Scotland will be a fairer system and will be less costly for the majority of house buyers, according to an Edinburgh-based property expert.
While the Finance Secretary’s announcement on tax rates has been met by some negative headlines, Scott Brown, of Warners Solicitors and Estate Agents, says the principle behind the changes is fair, will benefit people buying less expensive homes and will therefore boost the affordability of homes and encourage first-time buyers.
This week, Finance Secretary, John Swinney announced the rates of two new devolved taxes, the Land and Buildings Transaction Tax (LBTT), which will replace Stamp Duty, and the Scottish Landfill Tax.
Homebuyers in Scotland will pay no tax on properties costing less than £135,000, while a 12% marginal rate for houses costing more than £1m would come into force next April, when stamp duty is replaced north of the border.
Under the LBTT a marginal tax of 2% would apply to the proportion of a house sale transaction between £135,000 and £250,000, while a 10% rate will apply to those between £250,000 and £1m.
This is a marked change from the current system where buyers of houses costing between £125,000 and £250,000 have to pay 1% of the full price for SDLT.
Leading solicitor, Scott Brown, believes the new regime will help those purchasing lower priced properties and encourage growth in the housing market.
He said: “The existing stamp duty system was very unfair in that there were sudden jumps at the bands.
“The new rates illustrate a much fairer approach and the principle behind them looks genuine, rather than politically motivated. The rates are also in line with the indications which had previously been given by the Finance Secretary.
“I expect the rest of the UK to follow Scotland’s lead on this in the very near future.”
The new rates will see the burden of property taxes fall on any house buyer spending more than £325,000.
LBTT is based on a progressive scale of rates, under which buyers of homes worth £1m, for example, will pay £78,300 in tax, compared with £50,000 under the current stamp duty system.
Mr Brown continued: “The change in the way property tax is calculated will rectify the age old problem with Stamp Duty, where people at the various thresholds were always prejudiced.
“The stepped approach to the tax is a far fairer system. It will also mean that, for all transactions below £325,000, less tax will be payable, particularly helping those purchasing their first home.”
The new charges will mark the first time Scottish Parliament has levied taxation since the Union in 1707, made possible after new powers were devolved to Holyrood following proposals put forward by the Calman Commission on strengthening devolution.