SCOTLAND’S builders have welcomed the importance attached to housing investment in the draft Scottish Budget, announced by Finance Secretary Derek Mackay.
Nicola Barclay, chief executive of industry body Homes for Scotland, said the organisation was pleased to see the Scottish Government “confirming its ambition” in relation to housing plans. She added, “As well as a significant funding increase for affordable housing, the additional funding for skills bodies, colleges and universities that will help to plug the skills gap, is also welcome.
“The Land and Buildings Transaction Tax (LBTT) relief for first time buyers up to the first £175,000 of the purchase price could be a valuable boost for those aspiring to get on the property ladder, representing additional money towards their deposit or moving costs. However, given that this is not due to become effective until 2018/19, we are concerned that any delay may have a potential impact on purchasing decisions in the short term.
“Of particular note, however, is the establishment of the new £150 million Building Scotland Fund which will have a prominent housing and infrastructure focus to support interventions that will further accelerate and scale up housing delivery. With the funding and delivery of infrastructure a major housing blocker, we keenly await further details in the new year.”
Mark Coulter, chief executive of Coulters Property, also welcomed the news on LBTT for first-time buyers as a “good starting point” but he warned that “much more needs to be done” to enhance the overall Scottish property market. He said, “For those purchasing their first home, the relief of up to £175,000 will be welcomed with open arms and looks set to make a big difference, with an estimated 80% of first-time buyers being taken out of LBTT altogether as a result of this. While this is a good starting point, it does appear to simply echo the outcome from the Autumn Budget announced by the Chancellor last month and doesn’t position Scotland as a progressive market.
“I had hoped to see more dramatic changes to the LBTT system being announced, in order to encourage selling and purchasing further up the ladder. With the rising property prices in Scotland, the higher LBTT rates can be off-putting for buyers and result in current homeowners being unable to sell their property. This in turn means there is less movement in the market and a chance of the Scottish property market slowing down or stagnating.
“Going forward I would hope to hear more specifics about the planned investment in new build houses, not just affordable housing, and how the Scottish Government is going to ensure Scotland remains a viable place to live and purchase property. As a business owner, I find the increase in income tax disappointing and feel it will ultimately be detrimental to the economy in the long run making Scotland less attractive. We should be cutting taxes to encourage inward investment for Scotland to give the economy a much-needed boost.”
Innes Smith, chief executive of Springfield Properties, described the LBTT plans as a “positive step” for the housebuilding sector and those who need homes. He added, “With its progressive outlook, Scottish Government remains determined to improve the housing situation across Scotland. A greater proportion of first-time buyers will be exempt from paying Land and Buildings Transaction Tax (LBTT), making buying a first home more attainable.
“We are pleased to see the ongoing commitment to funding affordable housing and the large investments in infrastructure and superfast broadband which support the development of new housing. We are confident today’s news on LBTT, the Scottish Government’s £756 million commitment to affordable housing and funding for further action on homelessness represents real action for those in need.”
Shepherd Chartered Surveyors also welcomed the move to scrap LBTT for first time buyers on homes valued up to £175,000, but warned the move is “insufficient” to ease the bottleneck in the housing market caused by the current LBTT bandings.
Stuart Dunne, partner in Shepherd’s Aberdeen office said, “While this move is welcome, it is unlikely in itself to resolve the challenges facing the housing market caused by the current LBTT bandings.
“While this move may stimulate some first-time buyer activity, if the housing chain cannot move further up the ladder, due to disproportionate LBTT charging, the housing market will remain very challenging.
“Current LBTT bandings are generating fewer revenues than expected as buyers can ill-afford the excessive tax to move house. That’s why I support the mounting industry pressure for reform and would recommend shifting the 10% band to £500,000.”
