The value of prime property in Scotland rose by 1% in the final quarter of 2014, with buyer demand before a new tax law being one of the major reasons for a surge in demand.
The property index showed a rise of over 2% in property value from 2013, despite the first two quarters of 2014 showing no change. The report attributes the increase in demand for prime property in Scotland to the new Land and Buildings Transaction Tax (LBTT) that replaces stamp duty in Scotland from April, and a certainty in the countries political landscape.
New Rates
Under the rates proposed in the incoming LBTT system, any sales above £254,000 will incur a higher rate of tax compared with the current stamp duty structure with properties in the prime market subjected to an even higher cost. It is this that has led to a boom with many trying to purchase property before the new rules come into effect.
The report said: “The proposed LBTT rates published in October clarified how purchase taxes would change in April. The higher upfront cost of moving when LBTT comes into force, especially in the prime market, has prompted some home buyers and vendors to make quick decisions.”
The report also found that there was an 18% increase in those looking to buy property in the final quarter of 2014 than there had been in the previous year.
Trend Expected to Continue
Ran Morgan, head of Scotland residential at Knight Frank said: “We expect this trend will continue into the New Year, driven by a desire among vendors and homebuyers to move before the introduction of the new LBTT levy in four months’ time.”
“The announcement of the proposed Land and Buildings Transaction Tax rates in October has already encouraged vendors and homebuyers in the prime market to make quick decisions to avoid the increased tax burden.
“We expect this will continue and as a result are anticipating a busy start to 2015.”
He added: “In the country estates market, details of Land Reform proposals and CAP reform continue to emerge. Until these are finalised we expect the activity to remain subdued,”
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