Scotland cuts taxes for home buyers

July 10, 2020 / Isla MacFarlane
Scotland cuts taxes for home buyers

New initiatives to support homebuyers and help people into work or to re-train have been announced by Scotland’s Finance Secretary Kate Forbes.

The measures are part of the Scottish Government’s wider efforts to help the economy recover from the impact of coronavirus (COVID-19) and are expected to involve an investment of around £200m.

The threshold at which Land and Buildings Transaction Tax (LBTT) is paid will be raised from £145,000 to £250,000, meaning 80% of house buyers will be exempt from the charge – excluding the Additional Dwelling Supplement. Home movers purchasing a property costing more than £250,000 will save £2,100.

In addition, an extra £50m is being added to the First Home Fund, a shared equity scheme providing first time buyers with up to £25,000 to buy a property. This will support an estimated 2,000 first time purchases and increase the total funding to £200m.

Forbes announced the initiatives as part of a statement following spending announcements by the Chancellor of the Exchequer.

She said: “Regrettably the Chancellor’s statement is a missed opportunity for Scotland. The Chancellor’s economic measures outlined in the statement only generate an additional £21m for the Scottish Government’s budget, limiting our ability to tailor a Scottish approach to regenerating our economy.

“Nevertheless, I can confirm several important new steps we will take. I have listened to calls to raise the starting threshold for LBTT to help stimulate housing market activity and the economy. Today’s changes will benefit house buyers and are focused directly on the particular needs of the Scottish economy.

“To ensure first time buyers can also benefit, I will provide an additional £50m this financial year to directly support them to get on the property ladder.

With show homes and sales offices in Scotland now open again, builders are reporting strong levels of interest as lockdown restrictions begin to ease.

Nicola Barclay, Chief Executive of Homes for Scotland, said: “Lockdown has been an extremely testing time, during which people have spent much more time than usual in their homes. This has led to a re-evaluation in how people see their homes and what they want from them. As a result, high-quality, environmentally-friendly new build homes specifically designed for modern living are increasingly in demand. With homes available to suit all needs, budgets and locations, there really are options to suit everyone.”

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