Taylor Scott International News
Demand for prime properties for sale at £1 million and above is on the rise again in Edinburgh after a sharp decline in activity immediately after the introduction of the new property tax. The Land and Buildings Transaction Tax (LBTT), introduced on 01 April this year, is credited with leading to surge in demand beforehand and a dampening of demand afterwards. But now, according to Scottish property consultants CKD Galbraith, there are signs that prime property buyers are coming back to the market, although the available data shows how strong the effect has been. The first three months of 2015 saw 56 properties sold at £1 million plus in Edinburgh alone and there was a surge in the week before the introduction of LBTT when 30 of the 56 sales were completed under the old Stamp Duty system. Under LBTT, the buyer pays different rates of tax on the portion of the purchase price that falls within various bands, rising to 12% for the portion of the purchase price over £750,000. Registers of Scotland recorded a dramatic decline in subsequent sales at the £1 million mark from April until September with only three sales successfully completed in Edinburgh. ‘Our recent research shows that buyer and seller confidence is returning following the introduction of LBTT in April and the UK general election in May, with an increase in the number of properties coming to the market in Edinburgh,’ said Jamie McNeill, head of residential at CKD Galbraith’s Edinburgh office. ‘We are currently handling a number of private sales in the £1 million plus market in Edinburgh and are experiencing a rise in the number of local, national and international buyers registering with our Edinburgh office looking for prime property in the city centre,’ he explained. ‘With the tax changes for properties over £1m, the number of sales at this level is considerably lower than at its peak in March this year, however we expect the number of transactions at this level to continue to increase throughout the remainder of the year,’ he added. The new tax has affected the price of prime property in Edinburgh, according to the latest research from Knight Frank, with values up by just 0.4% between July and September and the rate of annual price growth in the city slowed to 2.5%, its lowest level since September 2013. The Knight Frank report points out that a £900,000 property now attracts a LBTT bill of £66,350. Previously, buyers would have paid £35,000 in stamp duty. Against this backdrop, a two speed market has emerged in the city. Price growth has been driven primarily by the sub-£500,000 market, which has proven to be more resilient to the recent tax change. As a result, price growth at this level has been stronger than the average for prime Edinburgh properties, the report explains. The average value of homes below £500,000 has risen by 1.1%… Taylor Scott International
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