Scotland’s version of the 3% stamp duty surcharge could have a detrimental impact on the market, the Council of Mortgage Lenders has warned.
Scotland’s version of the 3% stamp duty surcharge could have a detrimental impact on the market, the Council of Mortgage Lenders has warned.
The 3% surcharge on Scotland’s Land and Buildings Transaction Tax for second homes and buy-to-let will apply from April.
Paul Smee, CML director general, said: “Turnover of the Scottish housing stock is already only two-thirds the level of a decade ago, and this new surcharge could cause further disruption and stagnation to the market.
“The complexity of the proposals could create many unintended consequences and produce more problems than it solves."
This will be the first time buyers spending between £40,000 and £145,000 have had to pay the tax, as the CML warned: “this form of sudden high transaction costs can have a detrimental impact on activity levels, market liquidity, labour mobility and how existing housing stock is used."
The trade body added that levying the tax up front with the prospect of a rebate 18 months down the line was insensitive both to market realities and individual circumstances. Instead the CML said buyers should be able to defer payments for 18 months.
For renters, it warned, higher taxes could push rents up and in some instances deter buy-to-let investments, resulting in a shrinking private rental sector.
Smee added: “If this policy is designed to promote homeownership, we think that there should be better evidence as to why this requires a reversal of growth in the private rented sector.
“The private rented sector is a hugely important part of the market that accommodates those not wanting or not able yet to purchase their own home.
“This tax will put more costs on landlords and potentially create higher rents as a consequence, which would actually act as a barrier to would-be homeowners.”
