EIGHT out of 10 property sales in Scotland are set to be exempt from land and building transition tax (LBTT) - amid concerns the housing market could see delays in its recovery with no timescale set for the changes.
Finance Secretary Kate Forbes has announced that the threshold for homes where the LBTT is charged will be raised from £145,00 to £250,000 – while £80 million will also be provided to help first-time buyers with their deposits.
But the Scottish Government has stressed that the change will not come into force immediately and once in place, will remain so until the end of March 2021.
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Ms Forbes told MSPs that she has “listened to calls for me to raise the starting threshold” for LBTT in order to “stimulate the housing market and the economy”.
She added: “It’s important though that any change made in Scotland focuses on the particular needs if the Scottish economy.”
But the Finance Secretary added that “because of the time required to prepare legislation and for Revenue Scotland to be ready to collect and manage the tax”, the changes cannot be introduced immediately.
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She added: “The rates for the additional dwelling supplement and non-residential LBTT will remain unchanged.
“That means that eight out of 10 people purchasing property in Scotland will be taken out of LBTT and all those purchasing homes above £250,000 will be £2,100 better off.”
The move has been welcomed by businesses, but leaders have warned that urgency is needed in introducing the changes.
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “We welcome Finance Secretary Kate Forbes’ announcement that the threshold for the application of LBTT will rise to £250,000 which means that eight out of 10 transactions won’t be charged.
“This will not only boost the housing market it will also support the construction industry, both of which are essential to addressing Scotland’s chronic housing shortage.
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“We ask that this should be urgently fast tracked to prevent distortion in the marketplace.”
Ms Forbes was quizzed over whether the Scottish Government will extend business support. But the Finance Secretary said that she cannont recycle money from one part of her budget to fund another.
She added that the UK Government "must give us the funding or the powers to do it".
But Conservatives have warned that without the overhaul coming in immediately, there is a risk that buyers will hold off with property purchases until the threshold has been reduced.
Graham Simpson said: “By delaying its implementation, it just means that people won’t buy and sell houses until it comes in.”
He added: "It's somewhat welcome that Kate Forbes has listened to our demand for action on LBTT, but the change has to come in immediately if it's to have any positive impact.
"Scheduling this move for months down the line will grind the housing market to a standstill and do more harm than good.
“A number of trades rely on people moving home to carry out work, improvements and renovations, and they need this decision to happen now.
"The SNP needs to spend less time inventing grievance and more time implementing changes which will benefit the lives of thousands of hardworking families."
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An extra £50 million is being added to the Scottish Government's First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to buy a property.
The extra funding will support an estimated 2,000 first time purchases and increase the total funding to £200 million.
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