Analysis of John Swinney’s budget by Richard Street, partner, Aberdein Considine.
Everyone knows that buying property is an expensive business.
Asking prices have been rising at an incredible rate in many parts of the country, particularly Aberdeen and Aberdeenshire.
A consequence of that has been that many first-time buyers have been forced into the current 1% stamp duty bracket, which is £125,000.
From April next year, every home will have the first £135,000 tax free, and if the home is worth less than this amount, buyers will pay nothing.
But, as ever, there are winners and losers.
At the higher end of the market, under the changes those with a home costing just over £1million, stamp duty of £40,000 will be replaced by a new levy of £77,300.
How will this impact the market? Well, those at the lower end of the market won’t want to buy until after April 1, while those at the upper end will want to complete before the end of March.
This may mean the traditionally quieter winter months could be full of high-end properties coming on the market – and may well be some bargains to be had.
Overall, the new system is a progressive one. The new rates mean that 90% of homebuyers will either pay less or the same amount as they would under current arrangements.
Around 49,000 buyers each year will pay less tax on their new homes – 5,000 of these buyers won’t pay any tax at all under the proposals.
It will also end the market distortion caused by Stamp Duty.
Under the existing rules, tax due on buying a house for £240,000 is £2,400, but on a house costing £260,000 the tax due is £7,800 – that’s an increase of 225% in tax, even though the house price has increased by only 8%.
First-time buyers are the oxygen the property market needs to thrive, as they allow those already on the market the chance to move up.
Ultimately, these changes are good news for them.