ELPG welcomes Stamp Duty freeze but says more needs to be done to revitalise the property market

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The Government’s decision to freeze Stamp Duty on properties up to £175,000 is a step in the right direction, although more will be needed to fully revitalise the country’s property market, according to a group of Scotland’s leading solicitors.

The ELPG group, which is made up of five of the most experienced Estate Agents operating in Edinburgh and the Lothians, believes that further measures must be introduced by the Government in order to encourage first-time buyers to purchase homes and reinvigorate Scotland’s property market.

Last month, the group handed a petition into Chancellor Alistair Darling’s constituency office in Edinburgh urging him to freeze all levels of Stamp Duty in an attempt to bring relief to buyers and sellers across the country.

But although the Government has responded by freezing the tax on all purchases under £175,000, the ELPG is urging them not to rest on their laurels and insists that they need to consider other policies to continue revitalising the property market.

John Lints, of the Lints Partnership

ELPG member John Lints, from the Lints Partnership, said : “This is a good decision by the Government, which we believe will provide a much needed shot-in-the-arm for our property market and will bring a lot of confidence back for buyers and sellers.

“However, we would have preferred to see a total freeze on all levels of Stamp Duty and this should be just the start of a long process by the Government to help re-stimulate the Scottish property market.

“At the moment, we have a situation where there are a lot of people out there who are either trying to sell or wanting to buy but are unfortunately being affected by the current position in the property market. Having these potential buyers and sellers means the foundations are there for the market to improve rapidly as long as the right policies are implemented that will help encourage growth.

“By freezing Stamp Duty, the government has injected some good news that will help spark new life into the housing market. It means that first time buyers will view their first purchase as less of a financial burden, which will in turn encourage more transactions and release owners of entry level properties to move up the property ladder.

“However, the Government should also be looking at introducing other initiatives to revitalise the market. Freezing Stamp Duty is a good start, but it is not a solution on its own.”

The ELPG also believes that the Government should also consider lifting the ban on holders of Self Invested Personal Pensions {SIPPs} being able to invest in residential property, which they argue will help reinvigorate the Scottish property market by encouraging more stand-alone buyers to make property purchases.

Under current legislation, SIPP holders are only able to invest in commercial properties. In 2005 the Government drafted legislation which would extend the scope of SIPP investments to include residential properties but the then Chancellor Gordon Brown made a dramatic U-turn the following year which effectively prohibited investment in residential properties by holders of SIPPs.

Steve Spence, ELPG member and senior partner of Neilsons added: “There is no shortage of people looking to sell their properties and make the next move but because everyone quite rightly is adopting a cautious approach they are putting their property on the market with a view to securing an offer before committing themselves on a purchase.

“This is what is creating the stagnation in the market place and the situation will only be relieved by purchasers coming in to the market whose offer is not predicated upon the sale of a property – stand alone purchasers.

“Stand alone purchasers are either first time buyers or buy-to-let investors. The ranks of the first time buyers have been reduced by the early withdrawal of 100% plus mortgage facilities but there are bargains to be had as competition amongst sellers creates opportunities to buy your first choice property, possibly under market value.

“If the Government permitted SIPP investors to include residential properties in their portfolio the property market would receive a welcome injection of new funds from a totally new class of stand alone purchasers. There would be winners all round.

“Investors would be attracted to the scheme because of the tax breaks involved in including residential property in the SIPP; the Government would progress towards its long term aim of decreasing dependence on state pension arrangements; and most importantly new money would come into the market from people who do not have a property to sell.”

The ELPG group is made up of five of Scotland’s leading estate agents – Warners, Neilsons, Drummond Miller, Leslie Deans & Co and the Lints Partnership.