LBTT – Scotland’s version of stamp duty – was previously paid on properties valued at more than £145,000, but the Scottish Government as of July temporarily upped the threshold to £250,000 to boost the market and mitigate the negative impact of the Covid-19 pandemic.
Previous calls for the deadline’s extension have come from the likes of UK estate agent body NAEA Propertymark, which believes that a property tax holiday of at least six months could avoid transactions falling through, price falls and a sudden loss of momentum in the market.
Now also commenting is the Scottish Property Federation (SPF), whose chair Michaela Sullivan said that despite the optimism prompted by the vaccination programme, economic and market conditions are likely to remain tough in 2021.
“Therefore, we would like to see this support for the market extended until at least the summer, when we hope Scotland will be in a position to ease some of the most strenuous coronavirus restrictions,” she continued, also noting that revenues have been above average since the LBTT discount was introduced, with December seeing the highest monthly residential LBTT outturn in the tax’s history.
The latter point was also made by UK-wide lettings firm Apropos by DJ Alexander, which said LBTT revenues last month in fact saw a year-on-year rise of 44 per cent to £60.2 million from 13,580 residential transactions.
David Alexander, joint chief executive of Edinburgh-based Apropos, said: “A near 50 per cent year-on-year increase in revenue during December, at a time when there are few signs of growth in the economy, cannot be ignored.
“The reduction in LBTT, effectively forced on the Scottish Government by the actions of Rishi Sunak lowering stamp duty in the rest of the UK in July, has resulted in substantial increases in revenue at a time when it is most needed to restart the economy after coronavirus.”
Wilson Browne, partner at Edinburgh estate agency Coulters, said the Scottish government should “absolutely” consider extending LBTT relief, for a suggested six months, “purely and simply because the impact of Covid-19 and ongoing restrictions in such a fluid and evolving situation with a lot of unknowns”.
He also pointed out the Scottish property market has been highly buoyant since the lifting of the first lockdown restrictions.
Mr Browne echoed Ms Sullivan, noting the imminent end of the furlough scheme. Additionally, he said he believed that extending LBTT relief would provide more certainty for buyers and sellers as they head into spring and summer, with the added plus of increasingly available 90 per cent loan-to-value mortgages.
“This, in addition to extending the LBTT relief, will encourage more growth and movement in the housing market, allowing the Scottish Government to benefit from further LBTT returns,” he said.
Looking longer term, and ahead of this week’s Scottish budget, Mr Alexander said there was a compelling case to keep the tax’s threshold starting at a higher level “since it is clearly raising more funds which can be used to pay for the NHS, education, and kickstarting economic growth – indeed, there is a case for easing the rates at all levels”.