Clarity on LBTT change needed urgently
UPDATE: The Scottish Government has now confirmed that the LBTT change announced on Thursday 9th July will take effect from Wednesday 15th July. Find out more about the change to LBTT and other advice for buyers and sellers during COVID-19.
Yesterday, the Cabinet Secretary for Finance in Scotland, Kate Forbes, announced she would be changing Land and Building Transaction Tax (LBTT) by raising the initial threshold from £145,000 to £250,000.
However, this change has not been implemented immediately and the Scottish Government has not provided a date as to when the change will be put in place, although they have stated it would be made as soon as possible.
ESPC welcomes the raising of the LBTT threshold to assist property buyers in Scotland and the additional investment in the First Home Fund that was also announced yesterday. However, we are deeply concerned about the lack of clarity over a commencement date for the LBTT change.
By not implementing the change immediately, there is a serious risk that buyers in Scotland will be deterred and market activity (which has been strong since restrictions were relaxed on 29th June) will stall.
Transactions that had have already faced significant delays due to lockdown restrictions may also face further postponements and it is likely sellers will be discouraged from bringing their home to market due to the uncertainty.
Announcing this change without an implementation date risks stalling the market activity at a crucial time for property businesses across Scotland. Many ESPC member agents have expressed concerns about this. They are currently fielding many enquiries from property buyers and sellers asking when this change will be applied and some transactions have already been paused as a result.
Jenna Spence, Operations Director at Neilsons Solicitors & Estate Agents, said: “Whilst the LBTT move is to be welcomed alongside the increased investment towards the popular First Home Fund, the lack of certainty on the commencement date for the changes to LBTT and lack of further details is causing enormous concern in the property market.
“After three months of lockdown, the market re-opening in Scotland last Monday 29th was causing a stir and considerable uplift in activity. Without a date, purchasers won’t commit to any deals and conclude missives until they have certainty on the LBTT that they will be paying.
“We also need clarity on how this will impact on purchasers who have recently concluded missives and have an upcoming date of entry as this could be very unfair on those purchasers. We need immediate clarity and confirmation as the Scottish Government is impacting the positive uplift in activity by delaying confirmation of the date.”
Paul Hilton, CEO of ESPC, said: “Announcing the change to LBTT without a commencement date poses a significant risk to Scottish property market activity, which had been strong since restrictions were relaxed on the 29th June.
“We appreciate that there are reasons this change cannot be implemented immediately. However, in order to prevent a significant stall in market activity and protect property businesses in Scotland, we implore the Scottish Government to confirm a date and apply this change as soon as possible.”
Find out advice for Scottish property buyers and sellers during COVID-19.