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SNP told to match Sunak's stamp duty cut or risk housing market collapse

The Chancellor set out his 'mini budget' on Wednesday
The Chancellor set out his 'mini budget' on Wednesday

SNP ministers have been warned that they will risk the collapse of the Scottish housing market if they fail to replicate a huge cut in stamp duty announced by Rishi Sunak.

The Chancellor confirmed that house buyers south of the border would not pay the levy on property sales worth up to £500,000, with the stamp duty “holiday” remaining in place until March next year.

The Scottish Government came under immediate pressure to make equivalent cuts to its version of stamp duty, the Land and Buildings Transaction Tax (LBTT), which is currently applied to all residential property sales with a purchase price of more than £145,000.

Someone buying a home for £500,000 in Scotland would currently pay £23,350 in LBTT under existing rules, and industry figures warned that “a two-tier market which unfairly penalises Scottish homebuyers” would emerge if Mr Sunak’s policy was not matched.

“Scotland must follow suit if we are to face a level playing field and encourage homebuyers to continue to engage with the market during these difficult economic times,“ David Alexander, joint managing director of Apropos, an Edinburgh-based property management firm, said.

“Maintaining the momentum of the property market is crucial in the months ahead to reduce the likelihood of a collapse.

“Scotland must be able to compete equally across the UK in the future growth of the economy and I hope the Scottish Government responds quickly, and effectively to unify the property tax levies. They must act to ensure Scotland emerges from this period of economic uncertainty as strong as their counterparts in the rest of the UK.”

The Scottish Government’s budget is set to increase by £800 million as a result of Mr Sunak’s announcements , the UK Government said, while other measures, such as VAT cuts, a job retention bonus for employers and an eating out discount scheme applying across the UK.

Jackson Carlaw, the leader of the Scottish Conservatives, said "the consequences for families and the wider economy will be dire" if the stamp duty cut was not matched.

Alister Jack, the Scottish Secretary, said: "The stamp duty cut gives a helping hand to the housing market and building trades in England. I urge the devolved administration to use their powers to do the same in Scotland."

Asked about the possibility of an LBTT holiday in Scotland, Nicola Sturgeon said she would take her time to study Mr Sunak’s announcements. Kate Forbes, the Scottish Finance Secretary, is due to set out her response to the statement on Thursday.

Stewart Mathieson, Head of Markets at EY in Scotland, one of the “big four” accountancy firms, said the stamp duty announcement threw the differences in UK property taxes, and markets, into the spotlight.

“With the average detached and semi-detached home in Scotland costing £256,762 and £155,010 respectively compared with £619,136 and £387,061 in England and Wales, the impact of similarly lowering the LBTT threshold in Scotland has the potential to make a much greater impact on the housing market in Scotland but with a reduction to the overall tax take,” he said.

“The ambition for the temporary stamp duty holiday announced on Wednesday has the potential to stimulate the housing market and in turn trigger a ripple effect across the economy. We’ll have to wait and see if this tactic is replicated in Scotland, and what the fallout might be if it is not.”

Responding to Mr Sunak’s statement, Ms Forbes described it as "disappointing, underwhelming and fall short of the scale required to reboot the economy".

The Scottish Government had been pressing hard for its borrowing powers to be increased, to help with the response to Covid-19, but Mr Sunak has so far ignored the request.

The Chancellor said the Covid-19 crisis had "highlighted the special bond which holds our country together".

He added: "Millions of people in Scotland, Wales and Northern Ireland have been protected by the UK Government's economic interventions - and they will be supported by today's Plan for Jobs.

"No nationalist can ignore the undeniable truth: this help has only been possible because we are a United Kingdom."