The revenue generated by LBTT has gone up by ‘a record 750%’ in just ten years, according to DJ Alexander’s boss, David Alexander (pictured).

When the tax was first introduced in 2104, it raised £7m from 6,880 transactions at the equivalent of £1,017 per property sale. In April this year, it raised £61m from 8,100 transactions at £7,530 per sale.

And a year after (2015), the Scottish Government imposed an additional dwelling supplement (ADS) on second homes and investment properties. This raised an initial £1.5m but nine years on it has risen to a record £22.4m, or 36.7% of all revenues raised in the month.

Alexander says: “The 750% increase in revenues from LBTT must be a record for any tax. To increase by that amount over just ten years is extraordinary.

More severe in Scotland

“That property taxes are levied more severely in Scotland against first-time buyers (FTBs), those buying homes worth more than £325,001, and second home buyers and property investors displays a major difference in approach between here and the rest of the UK. The attitude is that these are all fair targets and can be taxed at a much higher rate than their counterparts south of the border.”

Have any other taxes or prices risen by so much in such a short space of time?”

He adds: “Have any other taxes or prices risen by so much in such a short space of time? Obviously not but this doesn’t seem to deter the Scottish Government who believes that this tax hits those with the broadest shoulders. This is defined as those who buy a property with a value greater than £325,001 when the 10% LBTT rate applies. In England, this higher rate does not kick in until a property is worth more than £925,000.”

“But it’s not just those buying a £325,001 home who have the broadest shoulders and must pay more. First-time buyers (FTBs) in Scotland are also treated to higher taxes than their English counterparts. In Scotland, LBTT starts at £175,000 for FTBs whereas in England they don’t start paying property tax until a home costs more than £300,000.

Disproportionate punishment

“Ministers may argue that if you can afford to buy a £175,000 first home or a £325,001 property then you can afford to pay a higher rate of tax. It is doubtful, however, that this is a credible argument given the level of taxation and the starting point. What we have here is a tax which disproportionately punishes Scots homebuyers compared to their near neighbours.”

Alexander concludes: “The other element of this tax which galls so many is that there is no obvious use of the money to build more homes or reduce the impact of the current housing emergency. If homebuyers could see some obvious benefits from their generosity in paying these substantial additional sums, then they may be more accepting of this higher taxation.

No option but to pay up

“Hypothecating this additional taxation directly into the housing sector could go some way to at least explaining why Scots – at all levels from first-time buyers to other home purchasers – are charged so much more for the fundamental right to have a home.

“At the moment there is little explanation of why this occurring and what the money is being used for. Perhaps by the time of LBTT’s 20^th birthday, we shall have a clearer explanation. In the meantime, we must simply pay up when we buy a home.”