It has been an interesting year for Scottish residential property in which we have seen a number of changes to long established practices. Perhaps the most important change has been the introduction of the Land and Buildings Transaction Tax to replace Stamp Duty.
The threshold at which LBTT is payable is set at 2% on residential purchases between £145,001 and £250,000. A 5% LBTT rate was introduced for any residential property purchase between £250,000 and £325,000. Finally the changes have seen buyers face a 10% rate for any part of the price between £325,001 and £750,000 and 12% for any excess over £750,000.
With new powers opening up to the Scottish Treasury in the near future - in line with The Smith Commission - we could be seeing further changes to LBBT. Some commentators think that the Scottish government will follow Westminster in unveiling a surcharge on buy-to-let and second homes – yet this remains to be seen.
Despite such radical change, the Scottish property market has remained buoyant. At the end of last month the Your Move Price Index revealed that house prices are up 1.4% year on year. Your Move managing director in Scotland Christine Campbell said the increases “could be down to Scotland’s rising employment rate, increasing by 3,000 in the three months to September to 2,614,000 according to the ONS."
She continued to say that “with interest rates unlikely to change until 2017, low borrowing costs and near zero inflation should also help to pull up prices in the future.”
In Edinburgh, we have seen a strong seller’s market this year - recent stats from the ESPC confirming this. The key facts from the ESPC House Price Report are as follows:
- There has been a healthy 15.2% increase in the number of homes sold in east central Scotland between August and October 2015, compared with the same period last year
- Average selling prices have increased by 1.5%, compared with the same three month period last year.
58.9% of sales are now achieving their Home Report valuation.
- Sellers are achieving an average of 0.4% over their Home Report valuation.
- It’s taking less time to sell a property, with the median selling time now 33 days, seven days less than this time last year.
With these positive trends set to continue into the New Year, 2016 may be the year to make your move!
Blair Cadell are a leading firm of Edinburgh solicitors dealing in a wide range of property, business, tax and personal legal matters.