New tax bands blamed for stagnation in Scottish property market

The latest RICS residential property survey reported a decline in the number of new instructions last month.

Hew Edgar, RICS policy manager for Scotland, said: “This latest survey merely reinforces what we have been saying for some time – that the current LBTT bandings are creating a bottleneck in certain areas of the market, and encouraging property owners to eschew moving in favour of improving their current properties.

“The Scottish Government must address this problem by reviewing the LBTT framework and putting in place a structure that would inject some much-needed fluidity into the market.”

Across the UK, headline price growth gauge slipped from +7 per cent to +1 per cent in July, signalling prices were broadly flat over the period and representing the softest reading since early 2013.

Simon Rubinsohn, chief economist at RICS, said: “Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.

“Lack of new build in the wake of the financial crisis is a fundamental factor weighing on the market. And there are some very real consequences for the UK economy from all of this, including the impact on the ability of people to be mobile when looking for work.

“The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable anytime soon.”