The Scottish Government announced their budget on 14th December, and it is likely everyone in Scotland will notice changes. But how will this affect housing? Especially, how does it impact first time buyers?
One of the announcements by finance secretary Derek Mackay is that first time buyers will not have to pay Land and Building Transaction Tax (LBTT) on properties up to £175,000. This comes after the chancellor, Philip Hammond, announcing in the autumn UK budget that Stamp Duty Land tax would be abolished for first time buyers on properties up to £300,000 in England and Wales.
In his speech as he announced his budget, Mr Mackay said: “As part of our support for housing, we are not just investing £3 billion over this parliament to increase the supply of affordable housing, but we will provide more support to help people to own their first home. These changes to LBTT mean 80% of first time buyers will pay no tax at all on the purchase of their first home.”
However for other home buyers in Scotland, the residential and non-residential rates for LBTT remain the same.
Furthermore, the biggest overhaul to the Scottish budget is the change to income tax, with a move to a five-band tax system. There is a new intermediate tax rate of 21p for earners between £24,001 to £44,273, while those earning £150,000 or more will pay an additional rate from £150,000. There is also a 1p rise to 41p for those earning between £44,274 to £150,000.
Paul Hilton, CEO of GSPC, said: “This saving on LBTT for first time buyers could be a really positive initiative to help give them a boost when it comes to buying a property. While the market has already seen two major LBBT changes in the last two years, this initiative could stimulate the market a little. However, we would welcome a wider consultation on LBTT and we would encourage the government to take a pragmatic view and consult with stakeholders about the ways the higher end of the market can be stimulated.”