Scottish building industry vows to ensure Scots not left behind following Budget for housing

Key amongst the Chancellor’s statements were the abolition of Stamp Duty Land Tax on homes under £300k for First Time Buyers, £15.3 billion of new financial support for house building over the next five years (which includes money for the government to buy land as well as delivering supporting infrastructure) and more money to help SME builders. This is in addition to the £10bn extra funding already announced for the English version of the Help to Buy shared equity scheme.

Laura Mair, EY’s head of tax in Scotland, said: “Although the average house price in Scotland is widely reported to cost less than the UK average, today’s announcement still begs the question of whether the Scottish Finance Secretary will feel the need to use the powers he has to extend the 0 per centLBTT rate beyond £145,000 in next month’s Scottish budget.

“He may consider the current rates to be sufficient enough to support first time buyers. Extending the zero rate could stimulate market activity, but it could also create house price inflation as sellers take advantage of first time buyers with more spending power.”

Chief executive of trade body Homes for Scotland Nicola Barclay said: “The Chancellor correctly identifies that not only have successive governments, over decades, simply failed to build enough homes to enable people’s home ownership aspirations to be achieved, solving the housing challenge also requires money, planning reform and intervention.

“The case is similar in Scotland, where we also face the same barriers that have resulted in the number of new homes being built each year flatlining at levels still 36 per cent below the pre-recession levels of 2007. If we are going to effectively tackle Scotland’s chronic undersupply of housing and address affordability, it is imperative that we have an all-tenure target that identifies the large number of homes that are required. This would focus all our minds on ensuring that the system is geared up to enable all parties to deliver the homes needed.

“With Homes for Scotland and its member companies standing ready to work with Ministers and officials to make this happen, we will be watching the Scottish budget closely to ensure that any consequentials received from the housing announcements are similarly allocated, particularly in relation to unblocking the infrastructure constraints that impact those developers who are trying to build new communities.”

Barclay also considered the Chancellor’s review into the gap between planning permissions and housing starts, adding: “The main constraints on the use of land for housing are related to obtaining all of the necessary approvals and agreements, a process which is lengthy, complex and unpredictable. So any action taken to address such blockers, or that identifies others, is positive.”

However, Scottish Greens leader Patrick Harvie said the Scottish Government would be foolish to follow the UK government’s lead by cutting stamp duty.

Speaking at First Minister’s Questions today, Harvie highlighted how stamp duty, already devolved to Holyrood and called the Land and Buildings Transaction Tax, was previously cut by the Scottish Government and warned that a repeat of this would likely lead to a rise in house prices in Scotland.

The Green co-convener also challenged the government to offset the dire economic consequences of the UK Budget by raising revenue from those who can afford to pay more to invest in public services and to cut inequality.

Glasgow MSP Harvie said: “One of the most short-sighted mistakes in the UK budget is the decision to cut stamp duty, which all serious analysis shows will push house prices even higher and entirely fail to benefit first time buyers. The method of their investment in new housing is also likely to benefit developers and landowners rather than people in need of truly affordable housing.

“The equivalent of stamp duty is devolved in Scotland, and the Scottish Government has previously already given in to pressure from the Tories by cutting it to compete with George Osborne’s policy. I welcome the First Minister’s intention to help first time buyers in the Scottish Budget next month, but she must give a guarantee that the Scottish Government will not repeat that foolish mistake.

“Of course housing isn’t the only area where the UK government is determined to help those least in need. There was another income tax cut for high earners, while people working hard to deliver public services have still not been given a fair pay rise. If the SNP’s Westminster leader meant what he said, that public sector pay must match the cost of living, and if we’re to avoid handing on Tory cuts to our local services or other parts of the Scottish budget, it’s time for the First Minister to come off the fence and accept that we urgently need a radical redesign of income tax, in line with Green proposals to protect low earners.”