Receipts rise
Property boom raised £250m more tax from buyers
A booming property market saw home buyers cough up nearly £250m more in tax last year compared to the 12 months before the pandemic, according to new analysis.
But the lettings agency DJ Alexander, which studied the figures, says Scotland’s higher tax rates compared to those south of the border, risk scaring away homebuyers, investors, landlords, and second home owners.
The Scottish Government revenues from Land and Buildings Transaction Tax (LBTT) totalled £642.6m in 2022, which was £247m (62.4%) higher than in 2019 (£395.6m).
The last six months alone have raised £380.4m and contain the six highest totals since LBTT was introduced in April 2015.
Over the last year £107.9m was raised from 1,270 sales above £750,000 meaning each purchaser paid an average of £84,960 in tax on each property.
A further £280.2m was raised from 16,760 buyers paying more than £325,001 for a property which is the point at which the tax increases to 10%.
The data shows that £172.1m was raised from landlords, property investors, and second homeowners which is equivalent to 26.8% of all revenue raised. The last five months of 2022 produced the highest monthly figures ever recorded.
David Alexander, chief executive of DJ Alexander Scotland, said: “There is no doubt that the property market has boomed over the last two years. Prices have risen at an unprecedented rate and demand has never been higher.
“The result is that taxes charged on property sales are now substantially higher than even three years ago.”
He added: “With almost 90% of revenues generated from a few thousand buyers it is important to realise just how vital these individuals are to ensuring we have a buoyant and dynamic property market.
“They are already paying considerably more in tax than their counterparts south of the Border, so it is essential that Scotland remains as attractive a destination as possible for homebuyers, investors, landlords, and second homeowners.”
He described LBTT, like Stamp Duty Land Tax (SDLT) in England, as a “simple cash grab for governments”.
He added: “If Scotland is to be seen as a progressive country wanting to attract the brightest and the best then we must ensure we have a property tax regime which is at least as fair and as competitive as our nearest neighbour.
“At present we risk putting off buyers, investors, landlords, and second homeowners with a much more punitive tax take. We must have a tax system which is more broadly based and encourages homeownership, investment, and the private rented sector.
“We should always be aware that those with more money always have the option of moving elsewhere and it would be a mistake to drive these individuals and companies away with excessive taxation.”
Since the turn of the year prices have begun to cool, though they are still rising, particularly in hotspots.
Mr Alexander warned: “It is important to be aware that as the house market slows, so these revenues will slow, and the government will lose income.
“We need to ensure that Scotland continues to have a strong and lively housing market and part of this must be fairer taxation on property.”
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Absolutely…the tax from property sales is effectively a Reverse Sales Tax…but usually the seller buys again and spends resulting in further tax.
The added Additional Dwelling Supplement as a penalty levied at 6% on the whole price not graduated as is LBTT means thd tax penalty is now excessive.
Buy a modest home for 300 k but you haven’t as yet got the proceeds from.a sale of your principle Dwelling and you have ADS to pay…find another 18k..its a cashflow problem. Sure it can come back to you when the money arrives from the last property sale if that happens within 18 months and was your principle residence.