House prices are set to rise in Scotland, surveyors have claimed, with sales expectations remaining positive despite ongoing concerns about a lack of stock in the market.
However, the organisation said that concerns remain over the impact of the Land and Buildings Transactions Tax (LBTT) on the higher end of the market, with surveyors reporting that the tax – which can see an extra £45,000 added to the cost of a £1 million home if the property is bought in Scotland rather than England – is “prohibitively high” and “having an adverse effect”. The tax was introduced by the Scottish Government in April 2015.
The October 2017 RICS UK Residential Market Survey said that UK-wide, both demand from buyers and agreed sales declined once more last month and prices remained flat - while Scotland bucked the trend.
Meanwhile, rents in Scotland are also on the rise, with the typical monthly rent now standing at £621, according to a separate report from HomeLets.
However, the figure was slightly lower than in September. The report said that while, UK-wide, the average increase reflects higher rents recorded in 11 out of the 12 areas of the country that HomeLet monitors, the pace of rental price inflation has slowed overall.
The report said: “Indeed, on a monthly basis, rents on new tenancies in October were lower in every area of the country than in September.”
The RICS survey revealed that across the UK, interest from buyers continued to decline in October, with a fifth more surveyor respondents seeing a fall in new buyer enquiries over the month. Agreed sales were also reported to have fallen again with 20 per cent more respondents noting a decline in transactions over the month at the national level.
Scotland, alongside Wales and the North East were the only areas to see any pick-up for agreed sales, while sales trends were either flat or negative across the rest of the UK.
Hew Edgar RICS policy manager for Scotland, called for the Scottish Government to introduce “a tax system that encourages fluidity in the market”.
He said: “While a rise in new enquiries and positive sales expectations are to be welcomed, this survey again underlines the concerns RICS has raised regarding the current LBTT bandings and the bottleneck they are creating in certain areas of the market.
“With a lack of housing stock being a pressing issue, a tax regime that can encourage property owners to eschew moving in favour of improving their current properties stymies the market and compounds housing stock issues.”
Simon Rubisohn, chief economist for RICS, said that the Scottish market was operating differently to that of central London.
He said: “Prices do now seem under pressure at the more expensive end of the market with a further rise in the number of properties transacting at below the asking price.”