The firm reports that the rates of tax imposed in Scotland are holding back the property sector, stifling growth and dissuading people from moving house, even to take up a new job.

David Corrie, Head of Estate Agency for Galbraith, said: “The property sector needs to function well at all levels to support economic growth, ensuring people can move house where and when they need to. The cost of a house move today is higher than ever, more properties are above the tax threshold and house sales are taking longer. Buyers tell us that the tax they have to pay is a shock, and is difficult to factor in to their relocation budget. We need a system that is in line with house prices today and does not unfairly penalize Scottish transactions.”

The average price of a home in Scotland has risen to £221,000. The majority of homes in Scotland are now above the LBTT threshold, which is £145,000.

There is also a significant difference between the rates imposed in Scotland and in England.

Currently a house purchased for £221,000 in England would be exempt from stamp duty, but the same house in Scotland would be subject to £1,520 LBTT (0.69%).

 

At the upper end of the market, the difference is even more striking - a £750,000 home in England is subject to £25,000 tax, (known as Stamp Duty Land Tax south of the border) which is an effective tax rate of 3.3%, but the same priced house in Scotland would be subject to £48,350 LBTT (6.45%).

 

David Corrie continued: “There is now a significant difference between the tax imposed on moving house in Scotland, compared with England & Wales, which creates confusion and disparity in the property market. Any further rise has the potential to really restrict the property market.”

In addition, the rented property sector is also an area where the recent rent controls have had unintended consequences, according to Galbraith. Some landlords have sold their property rather than be subject to potential rent controls in Scotland – which has had the effect of increasing competition and restricting the supply of property available to tenants.

 

David Corie concluded; “The residential property sector should be a driver of the Scottish economy but it has been negatively impacted by Scottish government policy recently. Supporting the property market in Scotland would boost consumer confidence and stimulate economic growth.”