Scottish budget: First-time buyers set to save

House-hunters buying three-bedroom homes across the Capital will save nearly £5000 under the new Land and Building Transaction Tax (LBTT), which replaces stamp duty and has been unveiled by Finance Secretary John Swinney. The threshold at which buyers pay nothing will rise from £125,000 to £135,000, as experts indicated the new system – due to come into force from April next year – would have no effect on deals up to £325,000. But revised duty – the first to be set in Scotland for more than 300 years – could discourage sales of larger properties, with those pursuing four-bedroom homes in prime areas such as Barnton and Marchmont set to face tax hikes approaching £3000. Experts said increased rates at the top end of the market would mean just over 13 per cent of buyers in Edinburgh and the Lothians paying higher taxes. But they said the number of sales in the low to middle range – estimated to account for around 60 per cent of Edinburgh deals – could be boosted by as much as ten per cent. Ken Greig, a PR expert who has worked with city housebuilders over a number of years, said: “In terms of kick-starting the Edinburgh property market at the upper end, this change won’t have much of an effect. “In Edinburgh, even £350,000 is not a big number. I think that for around 40 per cent of the properties on sale here, this change is not a significant move. “But for the remaining 60 per cent, I think this will be good for them and I think it’s good for people trying to buy houses for the first time.” Bosses at the Edinburgh Solicitors Property Centre (ESPC) said the new system would help remove “sudden jumps” in charges which were commonplace under stamp duty, with the new threshold lifting an additional five per cent of Lothians sales out of tax entirely. David Marshall, ESPC business development manager, said: “The short answer is that the change from stamp duty to LBTT is eminently sensible – the previous system could see a difference of £5 in the selling price lead to a difference in the tax being paid of several thousand pounds. “The vast majority of people in Edinburgh and the Lothians will be unaffected and there will be a significant percentage who will be better off. “There will be some short-term disruption around this, but that’s inevitable in any change to the tax system.” He added: “As we get closer to the introduction of the new taxes, it may be that those people who are likely to be affected by a not insignificant amount are tempted to bring forward their purchases so they can pay tax under the current system.” But critics said increased rates for dearer properties would hit some families hard. Andrew Perratt, head of residential in Scotland for Savills Research, said: “[For] young families who need to live in the prime hubs of Edinburgh, Aberdeenshire and Glasgow’s west end, the proposed increases are so punitive they may discourage many buyers from moving.”