Scottish Stamp Duty has been scrapped for first time buyers on homes worth up to £175,000, the Finance Secretary, Derek Mackay, announced in the Scottish Budget.
However, experts have said that the move will not address wider problems in the market, branding it “disappointing”.
The decision to scrap Land and Building Transaction Tax (LBTT) for first time buyers on homes worth up to £175,000 follows the move by Chancellor Philip Hammond to abolish Stamp Duty on homes worth up to £300,000 for first time buyers in the rest of the UK, which has been criticised for potentially pushing up house prices.
Hew Edgar, the Policy Manager for the Royal Institution of Chartered Surveyors (RICS) in Scotland, says: “Following in the footsteps of Philip Hammond and scrapping LBTT for first time buyers to the value of £175,000 is not the answer to stimulate activity in the Scottish housing market, making today’s announcement disappointing.
“Whilst this change has potential to stimulate activity in the short-term, it comes at a time when the market is subdued, and does not tackle the overarching problem of housing shortage supply across all tenures. Once again, we call on Scottish Government to review the current LBTT as a priority going forward, as this current framework is not only limiting market activity, but could ultimately bring the market to a standstill.”
Alan Cumming, the National Estate Agency Director for Aberdein Considine, also responds: “The Cabinet Secretary has gone some way to closing the gap between first time buyers in England and Scotland, but some will feel he hasn’t taken the necessary steps to address the difficulties of those struggling to buy their first home in more expensive parts of the country.
“Due to the bottleneck being created at the top end of the market, the current structure is expected to raise tens of millions less than forecast over the life of the current Parliament. This was a missed chance for Mr. Mackay to address that.”
Susannah Simpson, Partner and Head of Private Business at PwC, believes that the announcement will provide a saving from LBTT of up to £600. But she adds: “However, it remains unclear from the announcement whether first time buyers purchasing properties costing in excess of £175,000 will benefit from the relief.”
Nevertheless, Nicola Barclay, the Chief Executive of industry body Homes for Scotland, claims that the move could be “a valuable boost for those aspiring to get on the property ladder, representing additional money towards their deposit or moving costs”.
Mark Hayward, the Chief Executive of NAEA Propertymark (the National Association of Estate Agents), gives his comments: “We welcome this move. It means that a significant number of first time buyers will now be exempt from Stamp Duty, enabling more people to get onto the housing ladder. Nevertheless, affordability remains a real issue, as does adequate supply and, with no relief in sight to balance off supply and demand, it may not have the desired effect in the long-term.”
Meanwhile, a commitment to invest £756m to help meet the Scottish Government’s target to build 50,000 affordable homes over this Parliament was welcomed by the Chartered Institute for Housing in Scotland. Its Executive Director, Annie Mauger, says: “It was also encouraging to hear reconfirmation of the Scottish Government’s commitment to create a £50m Ending Homelessness Together fund, and to target this funding in accordance with the recommendations of the homelessness and rough sleeping action group.”
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