24 September 2014
With Scotland voting to remain part the United Kingdom and not seek independence the country’s property market is set to experience a burst of activity. With some predicting that a rise in sale volumes may also help reduce rising rental prices. Uncertainty over the result of the vote and the economic impact of a ‘Yes’ to independence had put a significant dampener on property sales over the summer, with the market virtually static. A number of Scottish estate agents reported that some purchase contracts even made completion contingent on a ‘no vote. But with a clear 55% of voters choosing to remain tied to England, Wales and Northern Ireland, fears over the country’s future currency and financial direction have subsided. With the result that properties that had been kept back in the run-up to the vote will likely now flood onto the market. One welcome effect of more liquidity in the sales market, say some, is a likely slowing of recent rental price increases. Scotland has seen some of the biggest rent price increases across the UK over 2013-14, up 10% in prime locations on the previous year. Early 2014 had seen rent rises begin to slow, with prices falling 0.5% in May and 3.8% in June, but nonetheless rebound strongly again in July and August. A report by the UK Office for National Statistics this month, showed that average property prices in Scotland nonetheless remain 4.7 below their 2008 peak – albeit only the east and southeast of England, and London, are significantly above their pre-financial crisis levels. Caution is however still evident among many Scottish sellers and buyers, with the country set to replace UK Stamp Duty with a new progressive Land and Building Transaction Tax (LBTT) next April, while the UK opposition Labour Party has announced a new ‘Mansion Tax’ on properties valued over £2 million should it win the May 2015 General Election. With negotiations now beginning on what powers will be more fully devolved to the Edinburgh Parliament, some predict Scotland may yet see further new property taxes.