Because it is a so-called “slab tax” where the rate of tax sharply rises at certain property values, it creates “vacuums” in the few thousands of pounds over the stamp duty thresholds, driving prices of certain properties artificially downwards. Put simply, nobody will pay £252,000 for a house because they have to pay another £5000 in stamp duty than if they had paid £250,000 for it. That’s bad news for anyone whose house is nicer than the one next door that sold for £250,000.
Obviously the new system is not going to suit everyone and some people are going to lose out whilst others benefit. However, the system is generally fair and doesn’t cause distortion in the market.
Any change will mean some people will end up paying less tax than before. It stands to reason that the government will want to get that money back from elsewhere. In this case they seem to be levying higher taxes on higher value properties than they currently do. However, given that the average property price in Edinburgh is around £200,000 and even then is significantly higher than any city in Scotland apart from Aberdeen, it does appear to benefit the majority of property buyers in Scotland.
It is also worth bearing in mind that this will actually remove the artificial cap on the selling price of a significant number of people’s properties and that this, in itself, will put money back into the pockets of many people in Scotland, even at the upper end of the market where the taxes are higher.
• Robert Carroll is managing director of MOV8 Real Estate