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Scottish property slowdown follows tax changes

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Property prices in Scotland have fallen following changes to the country’s tax system, new data has suggested.

Figures released by the Edinburgh Solicitors’ Property Centre (ESPC) said average property prices in the east central region of Scotland were down 0.5% on the same point last year.

The firm said a large number of high value property sales had taken place at the turn of the year, avoiding the land and buildings transaction tax (LBTT) which came into force on 1 April 2015.

The new tax system has replaced the stamp duty scheme which applies across the rest of the UK.

Properties worth £145,000 or less do not pay tax with a slab system for houses worth more than that amount.

The top band is for all transactions above £750,000, these are hit with a 12% rate of tax.

Maria Botha-Lopez, business analyst for ESPC said the Scottish market was currently adjusting to the new regime.

“We’re continuing to see the impact of the introduction of LBTT on the regional property market as average property prices have fallen in the period of April to June 2015, after LBTT was implemented on 1st April.

“A surge in average property prices in the first quarter was driven by larger volumes of high-end property sales, and now we are seeing a decrease in average property price driven by smaller volumes of high-end property sales in the second quarter.

“By comparing the first six months of this year against the same period last year we see a 9 per cent growth in average property prices, which looks like we have a better chance of balancing out the waxing and waning of the LBTT effect on property prices.”

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