On Source Direct yesterday morning we asked what the Scottish Finance Secretary Kate Forbes would do differently from the Chancellor Rishi Sunak’s mini-budget on Wednesday. The answer soon followed. Forbes announced a tax cut to property buying and selling (LBTT), very similar in substance to the Chancellor’s cut to the English version of the same tax (Stamp Duty). Whatever Rishi can do, Kate can do to.
It’s not clear how much revenue this property sales tax cut will cost the Scottish Government, but since LBTT raised £613 million in 2019-20 and that this change ensures eight out of ten Scots now don’t pay LBTT on home sales/buys, we can presume its a fair whack. Add on top of that the £50 million the Scottish Government has committed since the pandemic to the First Home Fund, a subsidy scheme for first-time house buyers, and that’s serious funds which could go towards social housing that is being committed to pushing prices up in the property market.
Be in no doubt that is the effect of these policies. The Treasury conducted a study in 2011of the impact of property sales tax relief, which found that first time buyers, who “would have purchased property in the absence of the relief anyway”, actually ended up paying up to 2 per cent more “in the absence of the relief after controlling for wider economic and credit conditions”. So the subsidy isn’t so much for the first-time buyer as it is for the banks, housing developers and estate agents. Figures obtained by The Ferret in 2017 found that the help-to-buys scheme of the Scottish Government goes almost entirely in to the pocket of just three volume housebuilders, Persimmon, Taylor Wimpey and Barrat. Persimmon’s former boss Jeff Fairburn tried to pay himself a record-breaking £110 million bonus in 2018, which was later knocked down to £75 million after a shareholder revolt. Persimmon made £1 billion in profit that year, with almost half of its sales made through government help-to-buy schemes. Is lining these people’s pockets again really the priority of the Scottish Government now, during a crisis which has led to the sharpest rise in crisis grants and children using food banks on record?
While those buying and selling properties are unlikely to face the threat of homelessness, the housing charity Shelter Scotland is continually putting outwarnings about “a tidal wave” of evictions in Scotland when landlords are allowed to evict again from September. A recent poll by Joseph Rowntree Foundation found 45 per cent of private sector tenants have seen a drop in income since the crisis, with 42 per cent worried about their ability to pay rent. The Scottish Government sided with the Tories to vote down Green MSP Andy Wightman’s motion to introduce a rent freeze, and to prevent evictions due to rent arrears. A Fair Rent Bill was dropped by the majority SNP and Tory Local Government committee at Holyrood because of their “workload”. Tenants’ union Living Rent said yesterday that it was putting landlords on “notice” that they will organise to resist housing evictions in the autumn. But instead of taking the voices of tenants seriously, the Scottish Government’s recently established Private Rented Sector Resilience Group didn’t even have tenant representation on it, made up as it was of government bodies, housing association chiefs and a business which gives property advice. The contrast between the disinterest the Scottish Government appear to have in the voices of tenants and their determination to meet every desire of the property lobby is stark.
September is just round the corner. The time for the Scottish Government to introduce lasting protections for tenants is slipping through its fingers. If no action comes, do not let a lack of available funds be held up as an excuse, given the lavish commitments that have now been made by the Finance Secretary to support rising property values.
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