The Scottish Government has said it is willing to consider reforms to controversial new property taxes blamed for stagnating property sales.
Finance Secretary Derek Mackay said he was willing to look at shifting the bands for Land and Buildings Transaction Tax (LBTT), potentially saving homebuyers thousands of pounds.
LBTT was introduced in 2015 after powers over stamp duty were devolved and became the first domestic tax charged in Scotland since the Act of Union.
However, it has consistently failed to raise as much revenue as expected amid claims the measure was poorly designed.
Official figures show property transactions in the top half of the housing market have gone into reverse since the tax was introduced, with LBTT now expected to raise as much as £800 million less than forecast over the life of the current parliament.
Property purchasers are charged a percentage based on sale value, starting from £145,000. The levy is 2 per cent on purchases between £145,000 and £250,000; 5 per cent between £250,000 and £325,000; 10 per cent between £325,000 and £750,000; and 12 per cent on properties costing more than £750,000.
Until now ministers have refused to bow to pressure over LBTT, but Mr Mackay has said he is willing to raise the upper limit of the 5 per cent band to £500,000, easing the tax burden on thousands of homebuyers in the middle of the property market.
If the change is carried out, it could provide an average saving of £9,000 to affected buyers according to an estimate provided by property group Rettie.
Mr Mackay told the Sunday Times: “I’m not an ideologue on this issue. We want the tax to function well and if there’s a case that an amendment of the current bands could help stimulate the housing market in that range, and the revenue it raises, then I will consider it.”
He added: “It’s early days. It’s normal to review policies.”
Scottish Conservative shadow finance secretary Murdo Fraser MSP said: “If Derek Mackay does perform a u-turn on LBTT rates it will be well overdue.
“For months now experts have told us that the high rates set by the SNP were stifling the market and leading to a drop off in sales.
“And with revenue projected to be down hundreds of millions of pounds from what was expected, it’s clear that the Finance Minister has made a huge error of judgment.”
Property experts said they believed widening the middle band of LBTT would have a “significant” impact on the property market and would increase government revenue.
LBTT has had a disproportionate impact on the housing market in Edinburgh, where average family house prices in parts of the capital can exceed £325,000. Homebuyers in the middle of the property market pay considerably more than under the Stamp Duty regime in England, where the 5 per cent rates applies to all sale values up to £950,000. A property bought for £400,000 in Scotland would incur a tax bill of £13,350 – a third more than it would cost to buy a home of the same value in England.