Impending ‘second homes tax’ sparks house sales surge

The House Price Index for Scotland by Your Move/Acadata found home sales rose by 21 per cent between February and March by 1,343 to 7,770 sales.

Analysts point to buy-to-let landlords rushing to beat the introduction of the 3 per cent increase on LBTT for the upswing, which led to the strongest March Scottish property sales performance in eight years.

According to the data, the average house price increased by £1,400 (0.8 per cent) to £169,379 between February and March but fell 9.7 per cent year on year from £187,646 in March 2015.

Christine Campbell, Your Move managing director in Scotland, said there was a “huge spike” in house prices in March 2015 due to sales brought forward to avoid the introduction of LBTT the following month, adding that current increases appeared “healthy and sustainable”.

A total of 20 out Scotland’s 32 local authority areas reported average house price rises in March, compared to 10 areas in February.

East Renfrewshire recorded the highest monthly price increase of 8.1 per cent to £244,095 – boosted by the sale of two £1 million-plus homes – while the Shetland Islands had the largest price fall, down 5.6 per cent to £143,356.

Ms Campbell said: “Home sales in Scotland have flourished in March, coming into full bloom with a 21 per cent upswing from February.

“The growth has ensured that this has been the strongest March for property sales in eight years.

“However, Scotland’s sales did not rocket at the same rate as those south of the border, which soared by 60 per cent month-on-month in March.

“The more modest increase in Scotland may have been due to John Swinney announcing the changes a month later than George Osborne, so many second-home buyers may not have had time to plan their investments.

“Scottish sales for the first quarter of this year are still well above the same period in 2015, up 18 per cent year-on-year.

“While house price growth is down year-on-year, it’s important to remember that this was due to the huge spike in house prices back in March 2015, following a rush of sales brought forward to avoid the introduction of the LBTT.”