Recent data produced by HM Revenue and Customs (HMRC) shows half the number of residential properties were sold in May compared with a year ago amid coronavirus lockdown measures. A total of 46,230 property transactions were completed during the month, down 52% on the same month last year.
Although demand is increasing post lockdown, there is an urgent need to kick-start the UK economy with a review of Stamp Duty Land Tax and Land and Building Transaction Tax in Scotland. The state of the housing market is an accurate indicator of the UK economy, and in order to strengthen our economy, it is vital for the government to review the rate of tax on property transactions across the country.
David Alexander, joint managing director of apropos said,“Now is an opportune time for the government to make necessary changes and a reduction in tax on certain transactions could directly increase the volume of properties being sold, subsequently benefitting the government and what can be obtained.
“As it stands, the rate of tax on a second property prevents many individuals from buying an additional dwelling, either as a second home or a property to let.
“This tax varies from 3 to 4% depending on which part of the country you are in. It is important to remember that not everybody who purchases a property is a multi-millionaire, for example there are many people who have worked extremely hard and have an aspiration to buy a second property to supplement their pension. The additional tax can be very restrictive and is often a real deterrent.”
“I do believe this is a real opportunity to kick-start the economy post COVID-19; a reduction in rates will increase the number of transactions taking place. The concept of increasing tax is not necessarily a direct benefit to the economy, as it can result in less actual transactions taking place.”
“There is also a pressing need for the government to assist those who are making their last move by reducing associated taxes on their final property transaction.
“Many retirees would like to downsize and move into a property that is more suited to their lifestyle, however, in many circumstances they decide not to pursue this move due the associated costs, as it would impact the inheritance of their families. By implementing a tax-free final property purchase, the volume of transactions at the top end would also increase and subsequently bolster the economy.”