Plea to extend LBTT relief to help housing market
Market is supported by government (pic: Terry Murden)
An extension of government tax relief is needed to maintain buoyancy in Scotland’s property market, according to the head of a lettings firm.
David Alexander of Apropos says the support provided through the Land and Buildings Transaction Tax (LBTT) threshold extension has encouraged individuals to move despite uncertainties caused by the pandemic.
He says it has also allowed tenants to seek greater security in their homes all of which has resulted in sustained growth in the homebuying and private rental markets.
Mr Alexander says there has been stronger growth since March 2020 than many would have expected or even hoped for.
However, with the LBTT threshold extension about to end in March alongside a rise in unemployment there is a serious risk of the market hitting a financial cliff edge which he believes could result in a sudden fall in Scottish property values.
If the Chancellor decides to increase capital gains tax (CGT) on second homes and investment properties, then much of the recent growth in the market could quickly become dissipated.
Mr Alexander, the joint chief executive officer of Apropos by DJ Alexander, said: “The fast-growing property market in Scotland has been one of the surprises of the pandemic with few predicting that it would be so buoyant over such a prolonged period.
“The LBTT threshold extension undoubtedly contributed to this boom along with buyers changed priorities and shifting housing demands initiated by reactions to the lockdown.
“The resultant boom has led to substantial increases in average Scottish house prices over the last seven to eight months which shows little sign of abating unless the market hits a brick wall at the end of March.
“It would be a shame, and potentially damaging to the Scottish economy, if the gains of the last year were simply lost through a sudden ending of the LBTT relief.
“Along with increasing house prices there has been considerable growth in the private rented sector which has also experienced something of a boom.”