RURAL land and property experts have issued a warning about a hidden potential time bomb for Scotland in George Osborne’s latest budget.
Bell Ingram say the Chancellor’s tax hike for second home owners in England is likely to have repercussions in Scotland – not least in presenting the SNP Government with a second property tax headache in just 12 months.
Joanne Stennett, an Associate at Bell Ingram’s Inverness office, cautioned that if Scotland introduces similar rises it could wreak havoc on the traditionally robust rural holiday home sector north of the border.
She added: “The second homes sector is a crucial part of the property market across much of rural Scotland. In fact, it has been a significant factor in supporting property value and transaction levels through the downturn.
“This is particularly true throughout the rural west coast and the islands where the holiday home market represents a good proportion of total transactions and is an important part of the rural economy.
“Traditionally holiday homes in Scotland have been regarded as representing very good value for money when compared with other parts of the UK.
“However, at the moment the market is fairly static, so any increased tax burden on second home buyers would almost certainly force property values down and could have a chilling effect across the entire rural property market.”
In his autumn statement, delivered on Wednesday (Nov 25), Mr Osborne announced that second home buyers in England will face a 3% premium on top of their Stamp Duty Land Tax (SDLT).
In Scotland, the equivalent of SDLT is the Land and Buildings Transaction Tax (LBTT) which was introduced earlier this year amid much controversy.
Joanne Stennett said: “The Scottish Government now has a difficult choice to make. For the second time in a year, the Chancellor has left the SNP to decide whether they follow his property tax reforms or risk criticism by maintaining the status quo.
“Quite simply, a 3% rise in Land and Buildings Transaction Tax (LBTT) would be bound to have a significant impact on the market in rural areas.
“If such a rise was introduced for second homes, inevitably there would be a downward pressure on sale values to compensate for the change. In short, it could be an additional barrier to buying and selling in what is already a static market.”
The change in England, which will gather additional tax revenues of around £1 billion from buy to let landlords and second home owners, is being branded as a fair way to gather additional tax receipts from those who can best afford it.
However, Joanne Stennett added: “The burning question now is whether the Scottish Government can resist the temptation to follow suit and what impacts such a change would have on the market.”
Perthshire-based Bell Ingram is Scotland’s leading rural land and property agent.
Established 112 years ago, Bell Ingram has 130 professional staff across 11 UK offices, including chartered surveyors, estate and forestry managers, architects, building surveyors, tourism and green energy specialists.
