YOUR front-page story (“Slump in housing market blamed on new tax bands”, August 10) suggests that all is not well with the Land and Buildings Transaction Tax (LBTT) introduced by the Scottish Government in 2015.
The source for this information is the Royal Institution of Chartered Surveyors (RICS) which goes on to say that LBTT on properties bought for more than £325,000 and under £750,000 is 10 per cent. This is misleading as it is only the excess over £325,000 which is subject to the 10 per cent tax band.
A property selling, for example, at £326,000 will attract LBTT of £5,950 which equates to a tax rate of 1.82 per cent on the purchase price. An equivalently priced property in England will pay more and attract Stamp Duty of £6,300, being a tax rate of 1.93 per cent.
You also report that, at the higher end of the market, “critics say LBTT can add £45,000 to the cost of a £1 million home in Scotland compared to England”. It is not clear who these critics are but they are wrong. LBTT on a £1m property in Scotland is £78,350 compared to £43,750 in England, a difference of £34,600.
At the higher end of the market there is no doubt that £1m-plus properties in Scotland will pay a lot more in tax than in England but, as the majority of properties in Scotland sell for under £325,000, each will pay less LBTT than the equivalent Stamp Duty in England.
Furthermore, in Scotland there is no LBTT on any purchases up to £145,000, whereas in England tax is payable on purchases over £125,000. In the middle price band of, say, £400,000, LBTT payable in Scotland will be £13,350 compared to £10,000 in England.
Being the first domestic tax levied by the Scottish Government in 300 years, LBTT was designed to address some of the inequalities facing those trying to get on to the housing ladder or those trading up to a slightly larger home. It does just that by keeping the tax lower than in England. A bit more tax for those in the middle price band is not unreasonable and more again for those whose finances are such that they can afford to live in upmarket dwellings, many of whom are buying in Scotland for the first time and do nothing to free up the chain of housing stock, is also not unreasonable.
The same housing slump is affecting the rest of the UK and London in particular, where estate agents are struggling and the share price of some is plummeting.
The reasons for the slump are many but there are a lot of commentators on the housing scene pointing to the uncertainty caused by Brexit and the economic position of the UK.
This, I think, is the main reason for the slump and downturn in LBTT revenue in Scotland and Stamp Duty in England.
Alan M Morris,
20 Kirkhouse Road,
Blanefield,
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