The Scottish Property Federation has called for the 5% threshold for residential land and building transaction tax to be raised following an apparent downturn in value and transactional volume in the first year of LBTT.
The SPF wants the tax, which is applied to residential and commercial land and buildings transactions in which a chargeable interest is acquired, to have a higher threshold of £500,000. The federation made the submission to the Scottish parliament’s finance committee enquiry into the LBTT’s first year of operation.
The body said that the LBTT’s main effect was on high-value properties priced above £325,000. Both the value and number of transactions for these properties has fallen after years of growth.
The SPF said the shortfall in anticipated LBTT revenue from the residential sector had had a negative impact on the wider residential market.
The commercial property market, which saw much less radical reform of rates and thresholds, produced more revenue than expected.
David Melhuish, director of the Scottish Property Federation, said: “In the residential market, we need to ensure buoyant activity across all tenures.
“People need to upsize and downsize as well as relocate for work or other reasons. If you make it harder for people to move at the higher end of the market, then it makes it more difficult for people aspiring to move into that market.
“This then makes is more difficult for people to get a foot in the housing market at all if the number of properties available is reduced.”
The SPF also commended the Scottish government for pledging to remove larger-scale PRS investments from the scope of the 3% additional dwellings supplement.
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