Edinburgh leads the way in £1 million property sales

Edinburgh leads the way in property sales.
Edinburgh leads the way in property sales.
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Edinburgh remains the hub of the million pound homes market, a study has revealed, with 33 sales recorded in the first half of this year.

The report, from high-end estate agent Savills, found that the Capital accounted for 59 per cent of the 56 £1 million-plus transactions which took place in the first half of 2017.

However, the figure in both Edinburgh and across Scotland was lower than last year, when a total of 79 £1m-plus properties were sold nationwide over the same six month period.

In the Capital, 45 £1m-plus homes were sold in the first half of last year – a 26 per cent drop on the same period in 2016. East Lothian was more buoyant, with eight top-level transactions over the past year.

Property experts blamed the “punitive” rates of Land and Buildings Transaction Tax (LBTT) and warned that the tax is curtailing Scotland’s million pound market.

A separate study from an Edinburgh-based estate agent found that one in five potential homebuyers across the market has cited the tax as a reason for their decision not to move in the past two years, with two thirds branding it “unfair”.

The survey by McEwan Fraser Legal found that 38 per cent of people who considered buying a new property since the LBTT was introduced failed to do so.

The tax, which was introduced by the Scottish Government in April 2015, can see an extra £45,000 added to the cost of a £1m home if the property is bought in Scotland rather than England. Property professionals warned in advance of its introduction that it could impact the higher end of the market and the Scottish Government is coming under increasing pressure to reconsider the measure.

Ken McEwan, chief executive of McEwan Fraser, said that in light of the survey findings the Scottish Government should consider carefully the detrimental impact the tax is having on the housing market and on reduced tax receipts.

The Scottish Property Federation has calculated that revenues generated by the LBTT in the past year are £57m down on Scottish Government forecasts because of fewer sales.

“If stagnation happens at any part of the housing market, it has a knock on effect all the way back to first-time buyer properties – precisely those the tax was intended to help,” he said.

Faisal Choudhry, head of residential research in Scotland for Savills, said: “Last year the million pound market seemed to be absorbing the punitive rates of LBTT better than other price bands. However, the taxation malaise is now spreading into this market.

“LBTT is putting buyers in Scotland at a distinct disadvantage, and will do little to attract wealth from outside Scotland.”

Savills said the LBTT tax on a £1m residential property is £78,350 for a main home or £108,350 for an additional property.

Scottish Conservative shadow finance secretary Murdo Fraser said: “The SNP may think it can ignore what’s going on in this specific area of the housing market. But the changes it made to stamp duty are jamming things up. If fewer properties at that end of the scale are changing hands, not only is less tax collected, but it’s bad for the wider economy which relies on a healthy housing market.”

A Scottish Government spokesman said: “We continue to monitor the market closely and officials are engaging with property sector regularly on market trends.”