New rules will mean that homebuyers in Scotland will pay no tax on properties costing less than £135,000, as Stamp Duty is replaced by the new Land and Building Transactions Tax.
The announcement by Scottish Finance Secretary John Swinney also included a new 12 per cent tax on homes worth more than £1 million.
Under the new Land and Building Transactions Tax, a tax of two per cent will apply to the proportion of a transaction between £135,000 and £250,000, and a 10 per cent rate to those between £250,000 and £1m.
“This creates a six-month window of opportunity for buyers at the middle and top end of the market to purchase a property before the tax they will have to pay increases considerably, " said Malcolm Leslie, partner at Strutt & Parker.
"One of the positive impacts of this announcement on residential property markets, which are still adjusting following the recent referendum result, is that it may spark a surge in activity in the late autumn and winter as buyers seek to secure a property before the punitive tax hike is implemented on 1 April 2015.”
Oliver Knight from Knight Frank Research. said that people buying a home worth less than £320,000 would see their stamp duty payments reduced, benefiting some first-time buyers and those keen to move up the housing ladder.
"However policymakers should consider how the impact of higher charges for homes worth £320,000 may affect the market," he added. "Many buyers in Edinburgh, Aberdeen and other rural locations within commuting distance of employment hubs, where prices for larger family houses tend to be higher, are likely to see a rise in the up-front cost of moving."
Savills Head of Residential in Scotland Andrew Perratt said that buyers in Edinburgh, where an average family house costs around £363,000, will be paying £13,600 in tax under the new system, or 25 per cent more than they would have paid in Stamp Duty. Buyers of properties worth £450,000 would pay 65 per cent more at £22,300.
"For young families who need to live in the prime hubs of Edinburgh, Aberdeenshire and Glasgow’s west end, where average house prices are considerably higher, the proposed increases are so punitive they may discourage many buyers from moving," he said. "In view of this we anticipate increased market activity between now and the spring, whereby buyers are likely to make quick and committed decisions before the new tax comes into force.
"With the referendum now behind us, the Scottish market has been poised for a healthy recovery. However, this relies on activity at both ends of the market, not just from first time buyers, and the new tax will have a negative impact at the higher end. As has been the case with changes to the taxation system in the past, we expect a short-term lull while the market adjusts to the impacts of LBTT for buyers and sellers alike."Reuse content