Bell Ingram - serving UK's land and property owners to make the most of their assets
Leading Property Firm’s Appeal: “LBTT Isn’t Working”
Carl Warden, of Perthshire-based Bell Ingram, is disputing comments by the Scottish Government that the introduction of the tax has been an “operational success”, claiming it is stunting the £325k plus housing market – especially for large rural properties – and its revenue is falling short of targets.
Land and Buildings Transaction Tax (LBTT) was introduced in Scotland in April 2015 in place of UK Stamp Duty Land Tax (SDLT), with the aim of creating a tax charge that is more proportionate to the actual price of the property.
It means people buying a home in Scotland pay LBTT linked to a sliding scale aligned to the cost of the property – but the rate is vastly different from that in place in England.
Carl emphasises that once the 10% LBTT bracket for properties costing £325,000 to £750,000 is reached, the Scottish tax quickly escalates compared to the rest of the UK, for example a property costing £350,000 will result in £8,350 LBTT compared to £7,500 SDLT. This then quickly adds up, rising to a staggering £78,350 LBTT compared to £43,750 SDLT on properties over the £1million mark – a 179% increase comparison.
These numbers also exclude any further taxation for second home purchases, which would attract an additional 3% of the whole purchase price.
Carl, who has over 28 years experience in the property industry, says that this information can, and has, stopped potential buyers in their tracks, resulting in them choosing not to proceed any further with the sale.
He said: “This is not a time for the Scottish Government to be proud. LBTT is clearly not working, and now is the time to make a change and realise they got it wrong.
“When I meet people who are looking to buy, their jaws hit the floor when they start to appreciate the scale of how much tax they have to pay.
“Transactions attracting this level of tax are making people do one of two things; either not move at all, or negotiate hard on the asking price based on the vendor reducing their price by the level of tax due.
“It is important to highlight that this is not just an issue for people at the higher end of the property market. If sales stop it – or prices are curbed – it ripples down the property ladder; putting further pressure on first time buyers.
“To show just how big the gap is becoming between the Scottish tax and that of the rest of the UK, we recently sold a property at £1.15m for which the LBTT was £96,350, compared to stamp duty at only £58,750 – that’s a £37,600 difference.
“This transaction also attracted an additional 3% second home tax of £34,500, which was a grand total of an eye watering £130,850 in purchase taxes.”
Bell Ingram’s role as a national land and estate agency firm means it is able to provide a unique perspective on the varied outcomes of the tax, informed by a wide network of agency offices across the country.
Established 117 years ago, Bell Ingram has 130 professional staff across 11 UK offices including: farm, estate and forestry managers; chartered surveyors, estate agents, architects, planners, and building surveyors; and tourism, GIS mapping, and renewable energy specialists.
Published on 8th February 2017