Budget 2021: Scotland 'will be at a disadvantage' if LBTT is not extended

The Scottish Government is under pressure to extend a relief on property sale taxes after Chancellor Rishi Sunak announced that the equivalent scheme in England would run until the end of June.

The Scottish Government is under pressure to follow the stamp duty move

Finance secretary Kate Forbes said recently that the reduction in Land and Buildings Transaction Tax (LBTT) would not be extended beyond March. The nil threshold for LBTT was raised from £145,000 to £250,000 last July.

However, following Mr Sunak’s announcement of an extension of the up-to-£500,000 "nil-rate band" for stamp duty to the end of June in England and Wales, the property industry north of the border called for Scotland to follow suit.

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Anthony Conroy, regional director for Scotland at estate agency Yopa, said: “Following the announcement from the Chancellor of the Exchequer today that the SDLT holiday in England in Wales will be extended to 30th June, it really is time for Holyrood to announce a similar extension.

“The current cut has provided the Scottish housing market with a much-needed boon, but if the LBTT holiday isn’t extended in line with its counterpart south of the border the Scottish market will be at a disadvantage.”

Property firms and organisations have previously called for the measure to be extended by six months, until the effects of the vaccine are fully felt.

Revenues from LBTT have been above average since the discount was introduced, with December seeing the highest monthly residential LBTT outturn in the tax’s history.

A separate initiative announced in the Budget to help people obtain 95 per cent mortgages will apply across the UK. The scheme will be open for new mortgage applications from April and will run until December 2022. Buyers will have the option to fix their initial mortgage rate for at least five years, giving them certainty over their repayments.

Richard Donnell, research director at Zoopla, said: "Supporting buyers with small deposits is key to widening access to home ownership for a part of the mortgage market that has been under-served.

"Our analysis shows the scheme will have the greatest benefits for buyers in lower value housing markets in northern England and Scotland, where a 95 per cent mortgage is more attainable."

A spokesman for the Scottish Government said: "Our analysis shows the scheme will have the greatest benefits for buyers in lower value housing markets in northern England and Scotland, where a 95 per cent mortgage is more attainable.

“Delivering the Scottish Budget 2021-22, Finance Secretary Kate Forbes confirmed the Scottish Government’s intention that the temporary change to the residential LBTT nil-rate band would come to an end on 31 March as planned. The first time buyer relief will continue to be available, meaning that an estimated eight-out-of-ten first time buyers will pay no LBTT at all.

“Between November 2020 and January 2021 transactions were 28 per cent higher than the corresponding three month period a year ago and our decision to temporarily increase the LBTT nil rate band to £250,000 until 31 March 2021 has clearly supported the recovery of the residential property market this financial year, as intended.”

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