New tax if selling house in Scotland

[EddieReadersglasses]

Just wondering if anyone knows the ins and outs of this new tax.
We agreed to buy a house in January this year but it won't be built till July 2015. Tax changes mean it could cost us tens of thousands of £s more which makes it completely unaffordable. However we will conclude missives prior to the change in system. Does anyone know whether this means we will pay current stamp duty rates or still be stung with new higher tax rate (10% of sale price!)
Causing a huge amount of worry for us as currently looking like our dream house will just not happen

Trawling the internet for information but not much to be found

£325k doesn't buy you a mansion in Aberdeen. You also need to live near a good school and work.

Houses are also small here - in part to keep heating costs down.

"The effective date of the land transaction is the date of completion of the land transaction, or another date as Scottish Ministers prescribe by regulations" as per www.scotland.gov.uk/Topics/Government/Finance/scottishapproach/lbtt

That is not the same as the date of entry - which will generally be about 6 weeks later. Generally the date of completion is taken to be the date of completion of missives, which then form a binding contract, superceded only by the signing of the disposition of the property.

As LBTT will be administered by Registers of Scotland, you could try contacting them for advice on how they will process applications like yours - Pre-Registration Enquiries, Meadowbank House, 153 London Road, Edinburgh, telephone 0131 659 6111.

A mansion?

Are we supposed to feel sorry fir folk who cannot buy a mansion?

This tax and Labour's mansion tax are very popular with voters actually. People will soon be moving around the UK based on where tax is lowest (the people who generate the taxes that pay those who earn so little they don't pay them).

And if this has the effect you describe it will bring prices down. Which is a good thing.

Bogqueen the £220k figure was quoted last April in the FT. It's gone up since then. Also the house selling system is offers over here which tends to push prices up.

The thing is that there are deprived areas in Aberdeen, and in Edinburgh, like anywhere else, which will bring the average house price down. But I don't see anything wrong with aspiring to live in a nicer house, in a nicer area. We are exactly in the category of people who this tax will affect considerably, but my socialist side can't get too excited about it. It will probably impact on the value of our current house, but then again it will probably also impact on the value of any house we look to buy in the future, too. It might mean we have to have a higher LTV ratio for a future mortgage than we would have if we were to buy now (as some of our deposit money will go in stamp duty), but then we'd never really max ourselves out on a mortgage anyway. If, in the long run, the changes to SD help to moderate house prices in some areas then I don't necessarily see that as a bad thing. House prices are quite silly where we are now, but we have our reasons for wanting to live here.

I do feel for the OP though, who had agree a purchase prior to this tax being announced. I can see how you could easily 'lose' in this situation.

"the £220k figure was quoted last April in the FT. It's gone up since then"

Not by 50%, surely?

If it has, then a brake on house price inflation is no bad thing.

in a fast market offers over can be as much as 40% above asking price.

Sealed bids also happen in Glasgow.

The fact is that if you cannot afford the stamp duty on a property then you cannot afford it.

This is true for everyone. We had to buy a flat under £250,000 because we couldn't afford stamp duty.

This system is fairer fur the majority of people.

which is why there are problems recruiting teachers in Aberdeen

And yes this system should help calm the market.

My sister lives in London. Her tiny I bed flat has just risen in value by £60,000 in less than 2 years. She has sold it but cannot afford a bigger flat in such an inflated market. These properties are going to sealed bids - in London- and getting 30/40 offers on them.

Avoiding this madness is good fir everyone.

"People will soon be moving around the UK based on where tax is lowest (the people who generate the taxes that pay those who earn so little they don't pay them)."

The tax is the same everywhere in the UK though.

And the market is far more effective at 'taxing' people than the government is.

E.g.,

HUGE and immaculate stately home, Loughborough: £3.25m set in 127 acres of parkland, with separate film studio
www.rightmove.co.uk/property-for-sale/property-45447058.html

Narrow terrace (barely any larger than the film studio included with the house above), Clapham: £3.25m with a garden consisting of a few feet of gravel
www.rightmove.co.uk/property-for-sale/property-45271579.html

No government taxes can compete with the insanity of the marketplace

orangey also big problems recruiting NHS staff with A+E being a particularly good example.

I love the way most people on this thread say either 'it won't affect me' or 'I'll be better off ' and it's therefore ok. So if you could afford a more expensive house but faced 10% tax on anything over 250k that would still be ok?

There is no 10% tax though.

Rates:

£130,000 = now - 1%, future: zero
£150,000 - now - 1%, future, 0.2%
£200k - now - 1%, future 0.65%
£250k - now - 1%, future, 0.92%
£300k - now - 3%, future, 2.43%
£350k - now - 3%, future, 3.51%
£400k - now - 3%, future 4.73%
£450k - now - 3%, future 4.96%
£500k - now - 3%, future 5.46%
£550k - now - 3%, future 5.87%
£600k - now - 3%, future 6.22%

You don't pay 10%.

And average Scottish household earnings around £26k, so this is a tax rise on houses worth 13x average wage. A lot.

If house prices too expensive, let's hope they fall.

"So if you could afford a more expensive house but faced 10% tax on anything over 250k that would still be ok?"

Yes actually - it's cheaper than the current tax up until £325 000. There are huge areas of the country where that will in fact get you a mansion, or near enough.

Even in Aberdeen I can see 4 bedroom houses about 3 miles out of the city centre for offers over £260 000.

So yes I'd be ok with being charged more tax if I was buying a house that costs double of what looks like a fairly normal family home with 4 bedrooms.

I feel sorry for anyone losing out during the changeover if that happens, but realistically you're talking about houses that people like teachers and NHS workers are not going to be able to afford anyway, with or without a change in tax.

"The tax is the same everywhere in the UK though. " Stamp duty which is the tax I meant will not after these changes be the same throughout the UK.

For example I have often looked at Scottish islands and other rural properties (but also Northumberland where I'm from ) for a second place. If the stamp duty is higher in Scotland I would be more likely to choose Northumberland. I am just saying different local taxes have an impact on where people choose to be and spend their money. I don't think they are good for a united country.

I was not suggesting anyone will reverse devolution, but if you don't like the tax charge in Scotland then vote in a different Scottish government.

I don't see what's united about, for instance, the poster in this thread:

www.mumsnet.com/Talk/property/2205000-Farnham-or-Haslemere

selling a house like this one

www.zoopla.co.uk/for-sale/details/34815705

banking £1.25m of unearned income, and going off to buy up half of the countryside.

And your second home in Northumberland/Scotland will still sell, when it is priced correctly. Nobody will shed any tears about your tax bill.

I work for nhs tabulah
The extra £25k I'd have to pay plus the money I'll lose on value of this place makes it completely unaffordable.
The 10% I'm referring to is on the additional tax on prices above that level. Even if that averages out at 'only' an additional 2% from existing that could be enough to stop lots of people from moving and the market will stagnate. There is a housing shortage and this will not help FTB as fewer houses will be available and they will become more expensive as a result

All I am saying is higher stamp duty in Scotland means if I ever bought a second property it is more likely to be in Northumberland as a result which is where I would then spend money when at it. I don't need anyone to weep tears for me. I am physically and mentally healthy and that's all that really matters to most of us. I am just saying Scotland is shooting itself in the foot over this.

Where are these £325,000 mansions?

Not-quite-mansions-but:

www.rightmove.co.uk/property-for-sale/property-43538737.html
www.rightmove.co.uk/property-for-sale/property-43763152.html
www.rightmove.co.uk/property-for-sale/property-46331467.html
www.rightmove.co.uk/property-for-sale/property-45523739.html
www.rightmove.co.uk/property-for-sale/property-46461508.html