Estate agent predicts tough year ahead
Sellers ‘will struggle’ to beat new tax deadline
Large parts of the residential property market face a “negative readjustment” in 2015, according to David Alexander, managing director of DJ Alexander, Scotland’s largest independent firm of letting and estate agents.
He said: “Many middle- to upper-market properties are already coming onto the market as home-owners try to beat the new Land and building transaction tax (LBTT) rates, but with so many vendors competing against one another, inevitably some will fail to sell by the April deadline.
“With potential buyers then unwilling to pay the draconian tax rates, there will be a surplus of homes in this category, some of which may take years to sell, as is the case on the continent.”
Mr Alexander believes this could lead to a return of “reluctant landlordism”, i.e. when unsuccessful sellers have no alternative but to rent out their homes.
He continued: “2014 has been extremely good for the conventional rental market but even here there is a cloud on the horizon – i.e. the threat of rent controls. This would be a disaster for Scotland by chasing away investment and leading to a shortage of private rental properties which now play a vital role in housing individuals, couples and families.
“For example, why would anyone invest in a Dumfries rental market subject to rent controls when such restrictions did not exist just over the Border in Carlisle?”
Mr Alexander predicted that LBTT would prove to be counter-productive as discouraging sales of more expensive properties would inevitably lead to less income for the Scottish Government. He added: “Hopefully, Holyrood will not make the same mistake by subjecting the largely successful market to rent controls.”