Call for ‘silver sellers’ to be offered downsize incentives to free up homes
Older homeowners looking to downsize should not have to pay the Scottish Government’s Land and Buildings Transaction Tax (LBTT) on their purchase in a bid to free up homes for younger buyers and re-energise the country’s flagging property market, housing experts have claimed.
The UK government is expected to publish its Housing White Paper this month, setting out a number of measures that will incentivise older homeowners with large properties in England, Wales and Northern Ireland to downsize – one of which could include stamp duty relief.
Now, the Scottish housing sector has called on Holyrood to scrap its equivalent LBTT for “silver sellers” north of the border and address a chronic shortage of properties for the older population.
Speaking to The Herald, Jeremy Blackburn, head of UK policy at the Royal Institute of Chartered Surveyors (RICS), said: “There are thousands of people living across Scotland who would be keen to downsize if they were offered the right incentive.
“Underused larger homes are not conducive to a dynamic housing market, and therefore exploring new ways to enable down-sizing could make a sizeable contribution to solving the housing crisis.”
It comes as new figures from RICS show a slowdown in property transactions as the end of 2016.
The findings showed that the number of potential new homebuyers in December was only “marginally positive” with two per cent more chartered surveyors seeing a dip in sales across Scotland last month.
There was also a fall in the number of chartered surveyors predicting higher sales in the coming three months – 15 per cent compared to 26 per cent in November.
Nicola Barclay, chief executive of Homes for Scotland, suggested that LBTT may be having a “detrimental impact” on the housing market some 20 months after property taxation was devolved to the Scottish Government.
“The impact of the new rates varies between market segments but a real additional burden has been placed on some buyers,” she said. “For instance, there is a disproportionate effect in regions such as Aberdeen, Aberdeenshire and Edinburgh, where the average family home commonly exceeds £325,000.”
Ms Barclay argued that LBTT is clogging up the market due to the fact that a 10 per cent levy kicks in on purchases over £325,000, in contrast to stamp duty in the rest of the UK where this higher rate only applies to purchases over £925,000.
“Given that people purchasing at the higher end of the market tend to be discretionary movers, our concern is that, by staying put, they block others from progressing onto or up and down the property ladder and thus exacerbate the country’s housing crisis,” she added.
Another problem is the paucity of desirable homes for those trading down the Scottish property ladder. A report published last year by the estate agents Savills argued that developers and housebuilders have failed to provide enough homes for the older generations, with relatively high land prices and an inconsistent approach to planning across Scottish local authorities also putting the brakes on downsizing.
Mr Blackburn said: “For any financial incentives to work effectively, there needs to be suitable accommodation for those individuals wishing to move. Critically, this needs to be in areas where they would wish to remain.”