What does 2015 have in store for the Scottish property market? For our predictions for the Scottish Property Market in 2015, read on…
The most significant event (that we know of so far) will be the replacement of Stamp Duty Land Tax (SDLT) on 1 April with Land and Buildings Transaction Tax (LBTT).
For a full analysis of the Stamp Duty reforms, there is a detailed article on our Blog:http://www.mov8realestate.com/2015/01/changes-lbtt-rates-april/.
This could lead to a distortion in the market in the early months of the year, with sellers and buyers looking to secure a sale or purchase early in the year to maximise their savings in tax. It must be borne in mind that the 1 April 2015 date relates to the ‘completion’ or ‘settlement’ date: it’s therefore possible that this will be a consideration for property buyers and sellers from the beginning of the year onwards.
It must also be noted that the levels of taxation, although announced by the Scottish Government to much fanfare late in 2014, actually still have to be finalised in the Budget in February 2015. With the UK government responding by making the Stamp Duty regime in the rest of the UK more attractive than LBTT for properties above £254,000, it is possible that the Scottish Government might revise these figures between now and then, albeit they have made a strong statement that they don’t intend to.
For properties valued up to £254,000, there shouldn’t really be much of an effect at all on the Scottish property market from the change-over from Stamp Duty to LBTT. If anything, in fact, there is a chance that buyers might want to push their date of entry back a little bit, ensuring that the completion takes place on or after 1 April 2015, to take advantage of the small saving (up to £200) that LBTT offers versus Stamp Duty.
For properties over £254,000, and particularly when you get up to about £400,000 and £500,000, the effect of the change from Stamp Duty to LBTT is much more extreme, with buyers saving several thousands of pounds under Stamp Duty versus LBTT. We would therefore expect a rush of activity in the first quarter of 2015, particularly for property sellers putting their properties on the market. We would expect that, around this price range, there might be a bit of a lull around April and May in terms of both people putting their properties on the market and buyers coming forward for these properties. However, after a slight dip around that time, we think that the market will fully recover and will simply adapt to the new tax reality.
For all property price brackets, we expect a very busy start to 2015. Some sellers were discouraged from putting their properties on the market in the second half of 2014, in Scotland, by some of the significant events that happened in our country, most notably the referendum and the various changes to property purchase taxes. People traditionally do put their properties on the market in the Spring, though the market is every bit as strong in January and February from a selling point of view.
With interest rates expected to remain low and with mortgage product availability constantly improving, we’d expect that 2015 will lead to an increase in property activity in Edinburgh and the Lothians, with prices continuing to rise steadily and buyer activity remaining strong.
We wish you all a very Merry Christmas and happy new year and look forward to bringing you more Scottish property news in 2015!