Transaction tax

Tax per property transaction has risen by more than a third in Scotland over the past three years

The tax paid by residential property owners in Scotland has risen by more than a third in the last three years compared to the same pre-pandemic period according to a major property company. DJ Alexander Ltd, part of the Lomond Group, which is Scotland’s largest lettings and property agency, said the amount of land and property transaction tax (LBTT) collected had risen by 36.3 % in the last year compared to the same period in 2019. -20.

The 12 months from April 2021 to March 2022 saw LBTT (the Scottish equivalent of stamp duty) raise £577.6 million on the sale of 110,160 properties, which equates to £5,243 per transaction. The comparable period (April 2019-March 2020) before the pandemic saw £404.5m raised from 105,160 transactions equating to £3,846 per property. For the period April 2020 to March 2021, there were 96,900 transactions generating £367.4 million in tax equivalent to £3,760 per property.

David Alexander, Managing Director of DJ Alexander Scotland, commented: “These figures highlight the huge increases in property values ​​in Scotland over the past three years. An average tax of £5,243 per transaction is a sign both that the property market is booming, but also that higher taxation in Scotland is starting to pay dividends for the Scottish government.

“With a higher tax rate for first-time buyers north of the border (there is no charge for properties up to £300,000 in England and Wales, but they start at £145,001 £ in Scotland) and significantly higher property tax levels for more expensive properties in Scotland, it looks like those charges are starting to bite. Anyone buying a property worth more than £325,001 in Scotland is paying double the rate on the excess they would pay in England.

David continued: “For those living in Edinburgh, where the latest data shows average prices at £315,070, this potentially places a disproportionate tax burden on the single city market. Of course, many people may wonder why anyone should feel sympathy for someone who can afford a more expensive property and should be forced to pay more. The problem is that it is not the cultural or financial elite who are buying these houses. They are ordinary people. A couple with a joint income of £60,000 and a reasonable deposit would be able to buy properties incurring the highest level of taxation, which includes large parts of the public sector including teachers, nurses, police, social workers and many others. There is a balancing act in any tax policy where you want to maximize revenue without limiting activity and we may be at the tipping point where Scottish property tax is too high compared to the rest of the UK and acts as a deterrent.

“While these figures show a buoyant and buoyant market, they also reveal that landlords, property investors and second home owners continue to contribute a substantial percentage of the Scottish Government’s property revenue. Just under a third of all transactions in March 2022 were made by investors, owners and secondary owners, which accounted for £147m in revenue.

David concluded: “More than ever, we need to ensure that Scotland is a welcoming environment for the brightest and the best. We want to attract the best educated and skilled people who can make a huge contribution to the financial and economic growth of Edinburgh and Scotland as a whole. Putting up financial barriers to attract the most capable in society will do little to advance Scotland’s future. We need to have a level playing field for Scotland to have a taxed and priced property market to attract the best if we are to create a country of opportunity and ability.