05 May Government changes to LBTT tax still impacting on property market
Due to the LBTT tax changes, the average selling prices across east central Scotland have seen a decrease according to the latest data ad analysis fro the ESPC.
In the first three months of 2016 the average property is now 10.5% less than it was compared to that of the same period in 2015, decreasing from £230,056 to £205,819. In the city of Edinburgh as a whole, house prices have decreased by 10.9% to £221,622. East and West Lothian have also seen significant decreases in the average house price over the past three months.
However, bucking the trend, there have been areas in which have a high number of one and two bedroom flats for sale attracting the buy-to-let and first time buyer market. One and two bedroom flats which have seen sale prices increase by 16.3% year to date, in particular the Leith Walk and Newington areas of Edinburgh, which are popular with students and the younger generation
As we reach the end of the first quarter of 2016, we’ve see huge demand for buy-to-let properties due to the 3% tax on second homes which was implemented at the beginning of this month. As a result of this, sales growth has remained steady with the number of homes sold in east central Scotland between January and March of 2016 increasing by 2.9% annually.
According to ESPC’s business analyst, the fluctuations in price can be attributed to the changes to property tax that the government has introduced over the last year. As a result of Land and Buildings Transaction Tax (LBTT) introduced in April 2015, average selling prices in the first quarter of 2015 were driven up by larger than normal volumes of high-end properties, with people wishing to buy before new tax rates came into place.
Similarly, a surge of sales of one and two bedroom properties can be attributed to the new 3% tax on the total value of second-homes over £40,000, which came into effect on the 1st April, with the aim of cooling the buy-to-let market.
It will be interesting to see whether the effect of the additional 3% tax on the buy-to-let market results in increased rents, which could make it harder for first time buyers to save for a deposit.
While the number of new homes brought to market between the months of January and March decreased by 3.6% annually, ESPC are still comparing the number of new listings with the same period last year when the LBTT tax change was announced.
To find out what the second half of 2016 will bring to the Scottish property, keep checking our blog for regular updates. If you’re selling your property, the first step is a Home Report for anyone selling in Scotland, so drop us an email at firstname.lastname@example.org or call us on 0131 608 0175 to arrange an appointment time to suit.