Plans to replace stamp duty in Scotland with a more progressive tax have been welcomed by the organisation representing solicitor estate agents in Scotland's capital.
The Edinburgh Solicitor Property Centre (ESPC) has welcomed
plans to replace Stamp Duty in Scotland from April 2015 with the
new Land and Buildings Transaction Tax (LBTT).
Giving evidence before the Scottish Parliament's Finance Committee, ESPC Business Analyst David Marshall suggested that LBTT's progressive taxation structure promises to be more attuned with Scottish housing market conditions. However, he also cautioned that the tax must be implemented fairly and equitably across the residential property market in Scotland so that households are not unfairly penalised when moving up the housing ladder.
Speaking before MSPs last week, Marshall said that though he
agreed with the move away from Stamp Duty, he pointed out that
under current proposals, many families looking to move into three-
and four-bedroom homes for sale in Edinburgh, and other areas with
property values higher than the Scottish average, will be expected
to pay substantially more in tax than is currently the case.
Speaking following the committee session, Marshall said: "ESPC fully agree with the general structure of the LBTT and believe the move to a progressive system will correct some of the market distortions brought about by Stamp Duty's 'slab' approach. We expect that the tax applied will be more reflective of the total value of the home being sold, which would bring an end to the inefficiencies brought about by the current approach.
"However, the Scottish Government must take care in determining
the proper level at which purchasing higher value homes incurs
substantially more tax. Example tax scenarios published by the
government indicate that anyone looking to buy a home for £400,000
would pay at least £4,500 more in tax, despite over 18% of sales in
Edinburgh of 3 and 4 bedroom homes selling for £400,000 or more.
Areas of the country where house prices are higher are not always
matched by similarly high income levels, so we would hope that the
final proposal takes this into consideration to avoid undue
pressure being put on families.
"Though we agree with the principle of the tax to place a greater burden on those wishing to buy higher value properties, it is important to avoid the creation of any undue blockages in the still-recovering housing market. If it becomes too onerous for a household to move up the housing ladder, it has knock-on effects on other areas of the market."