David Alexander comment: Lingerie tycoon’s house sale reflects wider issue

The top end of the property market in Scotland remains a hard slog, says Alexander. Picture: contributed.

But this has not, alas, applied to the Glasgow-born former lingerie tycoon Michelle Mone, who was elevated to peer of the realm by the former Prime Minister David Cameron in 2015. We learned recently that rather than receive an uplift, Lady Mone has sold her Scottish home for £125,000 less than she and her former husband paid for it 11 years ago.

Purchased for £1.525 million in 2008, the property, in the exclusive hamlet of Thorntonhall in Lanarkshire, is said to have been sold to a local businessman for £1.4m. It was originally put up for sale in 2012 for offers over £1.6m – but failed to find a buyer and had been off-market for some time until December last year.

So is this price sag typical of the top end of the residential market in Scotland today?

Well, given my earlier reflections in this column and elsewhere about the negative effect of the draconian rates of Land and Buildings Transaction Tax (LBTT) on high-end transactions, you could be forgiven for thinking this is the case. However, there may be special circumstances here, not least that Lady Mone also has a home in London, where she is mainly based. Also, it could have been that the house was bought when the market peaked just before the financial crash, a phenomenon from which many wealthy business types and celebrities have later had to take a hit.

But the “special case” attributable to this sale does not hide the fact that the top end of the property market in Scotland remains something of a hard slog, thanks not only to Holyrood’s excessive rates of LBTT, but also in part to the tax levied by Westminster on UK properties that may not be the owner’s “main home” (something that can negatively affect executives who, for perfectly-reasonable business reasons also have an overseas home).

Of the two, however, LBTT is having the greater effect. Take the original price of Lady Mone’s home, £1.6m, which would mean any purchaser having to find an additional £150,350 in tax. A price half that still attracts a tax bill of £54,350, or close to 8 per cent. Even for anyone who can “afford” an eight-hundred grand home, an additional £50,000-plus can often be a deal-breaker.

There is not even a “swings and roundabouts” element to compensate – ie vendors are prepared to drop their price on the basis that the property they eventually buy will have been similarly reduced. On the contrary, top-end properties are being placed on the market only when the owners find it absolutely necessary to do so; the result is that prices remain high for the relatively few that are available.

Our sector has tried, tried and tried again to persuade the Scottish Government to have a re-think on the basis that if top-end tax rates are cut, this will stimulate sales activity that will filter down to the middle echelons of the market, thus actually increasing the tax take. But so far our pleas have fallen on deaf ears.

A postscript to last week’s column in which I expressed surprise at the proposal by the Conservative government to follow Holyrood’s example and bring a ban on no-fault evictions of private tenants when their leases end.

My attention has been drawn to the satirical magazine Private Eye, which keeps records of statements by politicians – of all political parties – which come back to haunt them. The Eye reminded readers that in the 2015 general election campaign, the then-Labour leader, Ed Miliband, proposed that private tenants would be guaranteed security of tenure for three years, which at the time was condemned as “Venezuelan-style socialism” by the then-Conservative housing minister Grant Schapps. Fast-forward four years and the current minister, James Brokenshire, has gone much further with proposals for open-ended tenancies.

Isn’t party politics wonderful?

David Alexander is MD of DJ Alexander