Scottish LBTT Additional Dwelling Supplement increase to 4%

by Property 118

9:52 AM, 13th December 2018
About 3 months ago

Scottish LBTT Additional Dwelling Supplement increase to 4%

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Scottish LBTT Additional Dwelling Supplement increase to 4%

The Scottish government has announced in its recent budget that it will be increasing the Land and Building Transactions tax (LBTT) additional dwelling supplement to 4% from 3%. This will hit any additional landlord or second home purchases and if approved by the Scottish Parliament will be effective from the 25th January 2019.

However, any property purchase contracted into before the announcement in the budget will be exempt from the increase.

Scottish Finance Secretary, Derek Mackay, indicated that the increase was part of a government drive to support first-time buyers and assist people as they move up the property ladder.

The projected increase in forecast tax revenue is £2.3m in 2018/19 rising to £25.4m in 2019/20. However, it is unclear if this takes into account a subsequent decrease in the number of transactions caused by the increase in costs.

This then begs the question of how much longer before this is copied for the rest of the UK?



Comments

Gromit

10:22 AM, 13th December 2018
About 3 months ago

Another Finance Minister who has never heard of the Laffer Curve.

At a stroke he's just made the housing situation for Tenants worse in Scotland, as investment in property falls/moves to England. Not only that Scotland will end up with lower tax revenues, and this is before you take into account the cost of increased homelessness.

Janet Carnochan

10:34 AM, 13th December 2018
About 3 months ago

The problem in Scotland is that you are not encouraged to do well. It's not a vote winner. Personally if I didn't love the area that I live in I would be tempted to migrate south. SNP believes in equal distribution of wealth. Regardless of if you are prepared to work 70 hours per week for it or not work at all. As a landlord we still have section 24, however if I want to expand my business I will now need to pay 4% additional SDLT and also we still go into a higher rate 40% tax bracket after £43,000. Many landlords will be sitting thinking " is this still worth it? "

AJ

13:03 PM, 13th December 2018
About 3 months ago

i asked a question on a Scottish landlord FB page about the new laws, as I can see S21 going, and I was told it has discouraged a lot of landlords, but that has pushed up yields, due to lack of supply.

Janet Carnochan

14:14 PM, 13th December 2018
About 3 months ago

Reply to the comment left by AJ at 13/12/2018 - 13:03
The Scottish Government are even more hell bent on destroying the Private Rental System than Westminster. They don't seem to realise that many people are happy renting or others are not in a position to buy. All the new regulations are pushing good landlords out of the equation and like you say pushing up rents and giving renters less choice of properties. My last property that was coming vacant wasn't even advertised before it was snapped up and it was taken without even being viewed. That's how competitive the market is in some areas.

Luk Udav

19:07 PM, 14th December 2018
About 3 months ago

Reply to the comment left by Gromit at 13/12/2018 - 10:22
The Laffer Curve is doctrinaire nonsense and useless for guiding policy. It's clear Revenue =0 at tax rate =0% and at a tax rate =100% but LC gives no guide as to where revenue is maximised, even if that's what you want to do.
Given that, an extra SDLT tax discriminates in favour of new build rather than renovation. Quite why the SNP wants to emulate the Tories I don't understand. The Tories at least know who contributes to their coffers.
All that "help for FTBs" so far has resulted in is the obscene bonuses for the Persimmon guys.

Arnie Newington

9:05 AM, 15th December 2018
About 3 months ago

Everyone moaning about the gap in the higher rate band, Scottish Government response refuse to raise the band for inflation.

Everyone moaning about Land and buildings transaction tax, Scottish Government response let’s raise it for landlords.

Donald Tramp

9:08 AM, 15th December 2018
About 3 months ago

As a student hmo provider with several properties I feel the snp is gunning for me personally! Taken away my rights to set tenancy lengths whilst giving big private student housing providers exemptions to set fixed terms charging extortionate rents! How on earth do they think this is in tenants interests?

AA

9:07 AM, 16th December 2018
About 3 months ago

Reply to the comment left by Luk Udav at 14/12/2018 - 19:07
"The Laffer Curve is doctrinaire nonsense and useless for guiding policy" - Not quite. The Laffer curve recognises relationships of non-linearity outcomes underlying a principal that a linear application does not result in the desired outcome. For example, introduce further punitive taxes for individuals and 2 outcomes will transpire. Given rents are not infinitely elastic and individual thresholds of tolerance, landlords will sell up, or pay the cost of incorporation, both resulting in lower revenues.

AA

9:10 AM, 16th December 2018
About 3 months ago

Reply to the comment left by Donald Tramp at 15/12/2018 - 09:08
In the same boat. If it wasn't for the fact the Scottish govt gets its money from Westminster, they would never have introduced these policies.

Arnie Newington

15:13 PM, 16th December 2018
About 3 months ago

Reply to the comment left by Donald Tramp at 15/12/2018 - 09:08
It’s unfair that purpose built student accommodation can still do fixed leases while hmo can’t.

It’s also unfair that university letting agents can rent out landlords flats on fixed terms whilst private letting agents can’t.

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