Estate agents report buyer surge “chaos” ahead of new property tax
A single Edinburgh estate agent office sold 14 properties worth £330,000 or more over in just three weeks last month as well-off Scottish homebuyers raced to beat the deadline for the new property tax.
Strutt & Parker reported their busiest few weeks of trade in nearly a decade which included a deal that saved an Edinburgh buyer about £40,000 by snapping up a home worth more than £1 million jut days before the midnight Tuesday cut-off.
Estate agents said the market had gone into overdrive ahead of Wednesday’s introduction of the Land and Building Transaction Tax (LBTT) by the Scottish Government.
The Edinburgh office of Savills said they had sold “twice as many houses” in the first quarter of this year than last.
The new tax makes buying properties in Scotland more expensive for anyone paying more than £333,000 for a property.
Strutt & Parker said that 14 properties above the threshold, four of which were worth more than £1m, went from under offer to completion in three weeks during March.
A four-bedroom, luxury townhouse in Coates Crescent in the city’s west end had a guide price of £1.3m and by completing the purchase before Wednesday the buyers paid around £73,750 in Stamp Duty rather than £114,350 under the new LBTT.
Blair Stewart, from Strutt & Parker, said: “It’s the busiest time since 2007. Since before the credit crunch we haven’t seen this type of activity.”
Mr Stewart said the 14 properties sold had an average price of £750,000, saving the buyers an average in property tax of £21,000.
Peter Lyell, head of Edinburgh residential at Savills, said the start of this week had been “complete chaos”.
“A lot of it is very last minute,” he said. “A lot of it is going to the wire. A lot of paperwork has been done.”
Adam Gillingham, an Edinburgh property lawyer at Turcan Connell, added: “We’ve seen a rush up until last night of people buying and selling at the higher end to get the purchase at the old rate.”
He said one customer had saved £20,000 by beating the deadline.
From April 1, a £500,000 property will now incur a tax liability of £23,350 compared to that of £15,000 at the start of the week, a difference of £8,350.
A £1m property will now incur a cost of £78,350 compared to £43,750 previously making a difference of £34,600.
If the new tax had been in place last year well-healed Scots would have had to shell out £30m more than those south of the border.
In 2014 £193.8 million would have been generated from LBTT while under the UK Government’s new stamp duty rules the figure would have stood at £164.6 million.