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Prime Property Sales in Edinburgh hit by new land & buildings tax in Scotland

It is being reported on Property Wire that prime property prices in Edinburgh rose by only 0.4% between the months of April and June, which is the lowest quarterly price growth in two years.

On an annual basis prices have risen by 3.4% which is down from the recent 5.7% high in June last year, according to data from property firm Knight Frank.

The firm have highlighted the fact that this slowdown in price growth can be attributed to the introduction of the new Land & Building Transaction Tax back in April.

The levy, which replaced Stamp Duty on all residential property transactions in Scotland, means that individuals purchasing property with a value above £333,000 now pay a greater amount of money in purchase taxes. It is therefore believed that this led to a spike in prime transactions in Edinburgh before the introduction of the Land & Building Transaction Tax.

Since then, however, there has been a decrease in prime transactions levels in the city, with Knight Frank figures indicating that a drop in sales in the second quarter compared to the same period in 2014.

The Scottish government had originally forecasted that the tax would raise £235m in 2015/2016. However, this has failed to materialise and figures released by Revenue Scotland show that that only £18.4m was raised between April and June.

The report highlights that it will be interesting to see the impact that the Land & Building Transaction Tax has on overall revenues at the end of this tax year.

It is estimated that the housing market in Edinburgh will return to normal condition by the end of the summer months and it is believed that prices are still being underpinned by low interest rates and sluggish economic growth.

Edward Douglas-Home, Head of Edinburgh Sales at Knight Frank, commented: “We saw an enormous push pre-LBTT, with remarkably high sales in March followed by a very subdued April and May.”

He continued: “Our experience is that buyers, particularly those looking for family homes valued at between £500,000 and £1m, are having to eat further into their deposits when purchasing a property.”

 

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