SHEPHERD Chartered Surveyors is predicting that the changes to Stamp Duty Land Tax announced by Chancellor George Osborne in his Autumn Statement, will trigger record levels of activity in the housing market in the Southside of Glasgow at the start of the New Year as buyers purchasing homes over £255,000 seek to do so prior to the introduction of the Scottish Land and Buildings Transaction Tax in April.
The Chancellor’s changes mean the ‘slab’ system – in which buyers are charged a percentage of the full purchase price as soon as the value hits thresholds – has been abandoned and replaced by a ‘slice’ approach, with different percentage rates charged to each portion of the price. There is now no levy under £125,000, then 2% up to £250,000, 5% to £925,000, 10% to £1.5 million and 12% above that.
Whereas, traditionally, it has been February/March before activity levels in the home market are restored after a festive seasonal lull, this year Martin Waite, partner at Shepherd’s Glasgow Southside office, anticipates that January will herald record activity levels.
“The changes to the taxation system for buying houses announced by both Westminster and Holyrood are all set to shake up the property market as buyers in the market for homes priced higher than £255,000 seek to complete their deals by the end of March and thereby avoid an additional tax,” he said.
“In the short term the changes are likely to create a strong demand for both vendors and buyers to transact before the new regime takes effect. That’s why, in practical terms, we envisage a very quick and strong start to 2015.”
Waite said that the introduction of the new tax regime will also create a far fairer approach in the way the level of tax is calculated.
“In the previous set up, the thresholds of £125,000, £250,000 and £500,000 acted as a ceiling mechanism, but the new system is a progressive tax and, hence, will remove the capping effect,” he explained.
Reflecting on the housing market in the Southside throughout 2014, Waite said it has been a strong year built on steady growth.
“We have not seen the significant swings like other part of the country, such as Aberdeen, but, instead, have seen a natural increase in activity which, in turn, has seen a steady and sustainable pattern of capital growth,” he said.
“Interest rates are certainly a positive factor and, whilst it is very likely they will not stay at the record low levels for long, it is envisaged they will increase at a very sensible pace.”
Waite added that the Mortgage Market Review (MMR), which asked various lifestyle questions of mortgage applicants when it was introduced last April, has since bedded in and, whilst it may mean there are more obstacles to securing a mortgage deal, has been introduced for a sound reason and, hence, has led to a greater feeling of stability to prevail in the market.