A leading property market commentator suggests that an urgent review of Stamp Duty Land Tax (SDLT) and Land and Buildings Transaction Tax (LBTT) in Scotland is needed to kickstart the UK economy following the Covid-19 pandemic.
David Alexander, joint managing director of apropos, points to the latest HMRC transactions figures, which show 46,230 transactions took place in May due to coronavirus lockdown measures.
Despite demand for homes increasing rapidly post-lockdown, this figure is 52% lower than the one recorded during the same month in 2019.
Alexander, who argues that the state of the housing market is an accurate indicator of the UK economy, says a review of stamp duty could strengthen the economy and push through more transactions.
He specifically challenges the rate of tax on second properties, which can vary from 3%-4% depending on which part of the country you are in.
“It is important to remember that not everybody who purchases a property is a multi-millionaire. For example, there are many people who have worked extremely hard and have an aspiration to buy a second property to supplement their pension,” Alexander says.
“The additional tax can be very restrictive and is often a real deterrent.”
He is also calling for the tax on people making their final property transaction – most likely to be downsizing – to be reduced.
“Many retirees would like to downsize and move into a property that is more suited to their lifestyle.”
“However, in many circumstances, they decide not to pursue this move due the associated costs, as it would impact the inheritance of their families,” explains Alexander.
“By implementing a tax-free final property purchase, the volume of transactions at the top end would also increase and subsequently bolster the economy.”
This post has originally been featured in Property Investor Today.