Legal experts: LBTT, ADS and the process of buying a house in Scotland

Legal experts from various ESPC solicitor estate agents offer free legal advice to buyers and sellers at our Property Information Centre every day – we asked them what questions they are most frequently asked for our new legal experts article series.

The first part of the series looks at commonly asked questions about making an offer on a house or flat and the second part looked at the issue of house prices after Brexit. 

In the third part of our legal experts series, we focus on questions about Land and Building Transaction Tax (LBTT), the Additional Dwelling Supplement (ADS)and the main difference between buying or selling house in Scotland compared to England. Amy Howard, Property Consultant at Deans Solicitors, looks at some of the most commonly asked questions surrounding these topics.

Is Land and Building Transaction Tax (LBTT) the same as Stamp Duty?

Those who have moved to Scotland from elsewhere in the UK might wonder what the differences are between LBTT and Stamp Duty. Stamp Duty was replaced by Land and Building Transaction Tax (LBTT) in April 2015. LBTT works slightly differently to its predecessor.

Amy said: “LBTT accumulates incrementally rather than as a percentage of the full purchase price, and the easiest way to work out what LBTT you’ll have to pay is by using an online LBTT calculator.”

Amy also advises second home buyers to be aware that you will need to pay the Additional Dwelling Supplement (ADS) in addition to LBTT.

What is the Additional Dwelling Supplement (ADS)?

Amy noted that people often ask about ADS. This is a 4% tax on the full purchase price for those buying a second home (recently raised from 3%).

Amy said: “Quite often, ADS is something people haven’t heard of or considered, and it is well worth figuring into calculations for those looking to buy an investment or holiday home.”

What is the main difference between buying a house in Scotland compared to England?

While the house buying and selling processes in Scotland and England have their similarities, there can be quite a few differences, and many people who move north of the Border ask about this.

Amy said: “A key difference to highlight is that when buying in Scotland, you submit your offer through an experienced solicitor, so you’re getting professional advice on what to buy, where to buy, how much to spend and a real insight into the comparable sales.

“It’s a far more robust system than the one down south where conveyancers are not involved until the price is agreed and the deal is done.

“Frequently in England, the estate agent is representing both a seller and buyer to tie a deal together. Having independent advice as standard here gives us a far more professional purchase process.”

There are other differences and you should speak to a solicitor to find out more.

Find out more

If you would like to know more about LBTT or the process of buying or selling a home in Scotland, legal experts offer free advice every day at our George Street Information Centre so make sure to pop in.

Would you like to speak to someone about the first steps of buying or selling a property in Scotland? Find an ESPC solicitor estate agent today.