Land and Building Transaction Tax

From 1 April 2015, Land and Buildings Transaction Tax (LBTT) will replace Stamp Duty Land Tax (SDLT) on Scottish property transactions. The revised rates announced by the Scottish Government on 21 January are only 2% lower than the original rates from October last year and are still 27% higher than the SDLT paid by the rest of the UK.

LBTT is good news for home ownership generally as it means 50% of buyers will not have to pay property tax at all. However, it does mean the already heavily taxed middle classes will be picking up the tab and that could have an impact on the higher end of the market. In fact, the new system relies on 8% of buyers for around 75% of the tax revenue.

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The early part of 2015 has seen buyer activity increase in the prime property sector with buyers motivated to move prior to 1 April, and this is expected to tail off in the second quarter of the year.

Despite higher levels of property tax, Scotland (currently the most searched for location on Savills website outside London) will continue to offer comparatively good value, compared with London and the south.

For example, around £775,000 will buy a two-bedroom upstairs flat in Fulham, including SDLT. The same outlay will buy a four-bedroom Victorian villa with gardens in a comparable Edinburgh suburb, including LBTT – a bargain in anyone’s book!

Taken from
Spotlight: Scotland's Prime Residential Property Market - Spring 2015