Estate agents are urging the Scottish Government to mirror the Chancellor’s extension of the current stamp duty holiday south of the border to avoid creating a two-tier housing market in the UK.
Members of the Edinburgh Conveyancing Group are writing to finance secretary Kate Forbes seeking the same treatment for the Land and Buildings Transaction Tax (LBTT) whose threshold was raised last year shortly after the start of the Covid pandemic.
Rishi Sunak announced in his Budget speech on Wednesday that the current £500,000 nil rate band for the Stamp Duty Land Tax (SDLT) for England and Northern Ireland, which was set to end on March 31, will remain in place until June 30, giving buyers three additional months to complete.
After this date, ‘to smooth the transition back to normal’ the threshold will be reduced to £250,000, until 30 September. The nil rate band will then return to its previous level of £125,000 from October 1.
The Scottish Government raised the LBTT nil rate threshold from £145,000 to £250,000 until March 31, and ministers at Holyrood have so far failed to say whether there will be any extension.
The tax scheme currently imposes a charge of 2% on homes worth more than £250,000 up to 12% on those which sell for more than £750,000. Buyers of holiday homes, buy-to-let properties and other second homes are charged an additional 4% under the Additional Dwelling Supplement (ADS).
There are fears that failing to apply the same extension, aimed at preventing a cliff edge collapse of property sales, in Scotland could disadvantage the housing market here.
Struan Douglas, director of Edinburgh-based estate agency Purdie & Co, said: “There is already a disparity in the rate at which property taxes apply north and south of the border and failing to extend the holiday in Scotland will make the playing field even more uneven.
“From March 31, there will be a situation where home buyers in Scotland start to pay tax on properties worth £145,000 or more while their counterparts in England will pay nothing on properties worth less than £500,000.
“The English policy is dictated by the high value of homes in London and the South East but there are areas elsewhere, in the north of England for example, where prices are similar to those in Scotland and, in some cases, significantly lower.
“Ministers in Edinburgh need to give proper consideration to how such a discrepancy will impact on the market north of the border.”
The Scottish Government introduced the LBTT as a copycat measure for the SDLT, introduced by the Conservative Government at Westminster in 2015.
The LBTT had an inglorious start with ministers being forced to revise projected revenues to 2021 from £1.8bn to £962m, a drop of 46%.