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Stamp Duty replacement will hit families seeking to move up property ladder

Land and Buildings Transactions Tax will "penalise" families seeking to move up property ladder.
Land and Buildings Transactions Tax will "penalise" families seeking to move up property ladder.

The home building industry has warned that the new Scottish tax to replace the Stamp Duty could undermine the property market in areas like Aberdeen.

Homes for Scotland said people buying homes costing more than £325,000 will be worse off under the Land and Buildings Transactions Tax.

This will penalise hard-working families and hit those looking to move up the property ladder, it said.

Homes for Scotland chief executive Philip Hogg said the organisation supported help for first-time buyers and those on the lower end of the market.

But members were concerned that proposals to raise the nil rate band together with the introduction of 10% and 12% bands for homes more than £250,000 will “prove too punitive on the middle and upper market which generally comprises families with changing needs and aspirational movers”, he said.

“It cannot simply be assumed that these households are able to raise the significant additional funds required at the proposed new rates,” Mr Hogg said.

“As such, we are concerned this will result in damaging market stagnation at a time when Scotland already has an acute housing shortage.

“Like all buyers, this customer group is critical to the sustained recovery of a healthy, well-functioning housing market, particularly in areas such as Edinburgh, East Renfrewshire and Aberdeen which face great demand for family housing but where supply is low and house prices higher.

“These areas are likely to be badly impacted with a reduction in sales anticipated as a consequence.”

Mr Hogg called on the Scottish Government to promote a tax framework that allows movement up and down price levels without “artificial barriers”.

“That is why we are proposing in our submission to the Scottish Parliament finance committee that an additional band between £250,000 and £500,000 be introduced,” he said.

“We also believe that the tax rate on land purchases remain capped at 4% given that it is already more expensive to build homes north of the border.”