The 3 per cent Land and Buildings Transaction Tax introduced in Scotland in 2016 is inhibiting the buy to let market.
Many buy to let investors have left the sector due to the extra costs associated with the Land and Buildings Transaction Tax. Two thirds have been discouraged from investing in a second property due to the additional tax and the staged withdrawal of relief on mortgage payments.
The latest quarterly property monitor report from Aberdein Considine found that existing landlords are also increasingly selling with the aim of reducing costs by reducing their portfolios.
According to Aberdein, the changes have lessened demand for homes in some parts of Scotland due to an influx of new properties on the market. Sales fell in 17 of Scotland’s 32 local authority areas during the fourth quarter of 2017.
Managing partner at Aberdein Considine, Jacqueline Law, said: ‘There has been a significant change in the Scottish property market in the last six months and it is gathering pace. By targeting landlords, politicians north and south of the border are squeezing one of the biggest and most powerful buying forces out of the Scottish property market, which is already affecting sales in certain areas. However, there are other parts of the country where an overprovision of stock could weigh down property values, creating a great market for first time buyers but really tough conditions for home owners looking to sell.’
Aberdein Considine warned that there will be a sharp decline in rental stock entering the market, raising pressure in the buy to let sector and pushing rents higher.
The report found that East Renfrewshire, home to affluent Glasgow suburbs such as Newton Mearns, was the most expensive place to buy property in eight of 12 months of 2017. Prices in this area remained just ahead of Edinburgh. Prices in East Renfrewshire were up by 4 per cent while in Edinburgh they were up 6.2 per cent. The highest recorded growth was 13.4 per cent in East Dunbartonshire. West Dunbartonshire followed closely behind at 12.25 per cent, whilst East Lothian and Lanarkshire came next with growth recorded of 10.8 per cent and 10.2 per cent respectively.
Source: Residential Landlord