2014 has been quite an eventful year for the Scottish property market! A September referendum on whether or not Scotland should become independent, final details of a new property tax to replace Stamp Duty in Scotland from 1 April 2015, a shock announcement about changes to Stamp Duty in the UK effective from December 2014, and a host of other changes and property-related news have certainly given us plenty to write about on this Blog. For a round-up of the main stories of 2014, read on!
The Scottish Property Market – Main Stories
Stamp Duty and LBTT Changes
We, along with most other estate agents and solicitors throughout Scotland, had started to make plans for the introduction of Land and Buildings Transaction Tax (LBTT) coming into effect in April 2015. This is the Scottish Government’s first tax-raising legislation, and replaces the existing Stamp Duty Land Tax (SDLT) in what looked like a radical shake-up of the Stamp Duty regime. This would, of course, affect property sales in Scotland only.
We’d already started drafting up advice notes and training documentation in preparation for the change, but the UK Government decided in early December, as part of the Chancellor’s Autumn statement, to make sweeping changes to Stamp Duty for the whole of the UK, with absolutely no advance notice at all. That change came into effect with near-immediate effect on 4 December 2014.
The changes to Stamp Duty (SDLT) made it similar to the structure of LBTT: a more progressive tax regime, where only the proportion of the purchase price above or between thresholds is taxed at the higher rate, rather than the rate being applied to the whole purchase price. The net effect is that, from early December 2014, ‘new SDLT’ applies to the whole of the UK (in the whole saving people money in comparison to ‘old SDLT’), only to be replaced (in Scotland) in a few months (for settlements taking place on or after 1 April 2015) with LBTT. Depending on the price of the property, buyers will pay more tax under LBTT than under the newly-introduced Stamp Duty regime. This will, in certain price brackets, have a significant effect on whether buyers are rushing forward to buy properties in early 2015.
We’ve previously written in detail on this topic, and the previous blog entries can be found at:
To compare what you would pay under LBTT versus ‘new’ Stamp Duty, we have a handy calculator here too:
Land Registration etc. (Scotland) Act 2012
To be fair, this is something that will probably have bypassed most of the public. However, whilst not well-publicised, this Act will cause significant technical changes to the conveyancing process, the means by which the title of a property is transferred from one owner to the new one.
It came into force in December 2014 and has already caused mild carnage in the conveyancing world, delaying settlements.
We’ve already written extensively on the mechanics of this change, at: http://www.mov8realestate.com/2014/12/land-registration-etc-scotland-act-2012-mean-property-buyers-sellers-scotland/
Scottish Independence Referendum
The results of the Scottish Independence Referendum were announced in mid-September 2014, with the majority vote being in favour of Scotland remaining part of the UK.
There had been much uncertainty in the run-up to the vote, and whilst this was reported in typical ‘doom and gloom’ fashion by much of the popular press, our experience didn’t really reflect this. Indeed, we experienced a far more productive August than we would normally expect.
Mortgage Market Review (MMR)
The Mortgage Market Review, which came into force on 26 April 2014, probably bypassed most members of the public but caused all sorts of problems for the property market, at least in the short term.
The changes, following the City’s regulator’s review, saw mortgage borrowers asked to give more detail about their spending when they applied for a home loan and meant that borrowing would be based on how much the borrower would have left after regular expenditure, rather than lending being based on their income, amongst other changes that were introduced.
The review meant that it was taking several weeks for potential borrowers to make an appointment with their potential lender and that paperwork was taking far longer to process. This led to missives taking far longer to conclude on sales and to relatively short dates of entry being difficult to achieve.
We seem to be hitting some sort of equilibrium now, but our solicitors are still reporting that it’s taking about two weeks longer to get buyers’ loan papers through than before the MMR came into force.
MOV8’s Progress in 2014
We’re in the throes of fitting-out our new Edinburgh South branch, on Newington Road. This should be open in the next couple of weeks.
We’ve also acquired a new branch on Leith Walk and predict that this will be open early in 2015.
These are in addition to our existing branches at The Shore and in Corstorphine.
This will give us four offices throughout Edinburgh and a market-leading physical presence in the city. Three of these offices are on the main thoroughfares in their own parts of the city, boosting not only our own visual presence but that of our clients’ properties and also making it far more convenient for our clients who might want to pop into our branches to speak to someone about their purchase or sale.
Top of the (Christmas) Sales Tree
To the end of November 2014, we have sold 733 properties through ESPC, more than any other ESPC member firm. This was a whopping 70% more than we sold in the same period last year.
The total sale value of those 733 properties was over £134 million, up over 66% on the previous year.
With the average estate agency fee in Scotland of 1.1% plus VAT of the selling price (Office of Fair Trading, Home Buying and Selling Market Study (OFT1140b), Feb 2010), our sellers have saved £1,241,474 versus the average estate agency fee!
In comparison to the average Edinburgh-based solicitor estate agent estate agency fee of 0.75% of the selling price, our sellers have so far, this year, saved £678,536 in estate agency fees, a saving of £925.70 per person.
In comparison to an estate agency fee of 1.75% plus VAT, charged by some of the more expensive agents, the total saving to our sellers has been £2,286,931, representing an average saving, per seller, of £3,119.96 per seller.
Our Charitable Work
As a company, we are committed to donating 10% of our profits to charity. In addition to this, we’ve run a number of initiatives over the year with the aim of fund-raising and raising awareness for a number of other causes. The highlights have been:
Corstorphine Primary School Playground & Poster Competition
On an ongoing basis, we’re helping the children, parents and staff of Corstorphine Primary School to raise funds for the renovation of their playground. Currently, it’s lacking in exciting, stimulating equipment for the children to play on during their breaks. We’ve donated half of the £10,000 required and have pledged to help to raise the remaining funds through a number of initiatives, including a poster competition where the winner was displayed in our Corstorphine office window, wishing the local residents a Happy Christmas, and a cupcake sale at the 2014 Nativity where the kids designed and marketed their cupcakes following training from our Managing Director in sales and marketing techniques.
Throughout November, many of our male staff members endured itchy upper lips in support of Movember, the annual fund-raising drive to combat testicular and prostate cancer and associated mental health issues. Movember rules require the participants to be clean-shaven on the morning of 1st November, and to leave their moustache untouched for the whole month.
We raised almost £900 with our efforts and had a lot of fun.
Spread the Glove
In late 2013 and early 2014, we supported the Big Issue ‘Spread the Glove’ campaign, aimed at keeping Big Issue vendors warm. These vendors spend a lot of time outdoors, in all weathers, and, through this campaign, we aimed to equip Big Issue vendors with the basics that they needed to stay warm and healthy through the winter months – scarves, hats, gloves, and the like.
We hosted collection points in our offices, and even heard of one of our clients stopping by The Big Issue headquarters to deliver hand-knitted scarves in person, after seeing our original appeal!
Some of the smaller charity initiatives over the year have been Christmas Jumper Day, in aid of Save the Children; the Macmillan Coffee Morning, for Macmillan Cancer, and a variety of ad-hoc collections.
In closing, we’d like to wish you all a very Merry Christmas, and wish you all the very best for the New Year. We hope Santa is good to you all, and that he brings you all the presents that you asked for!
We look forward to being in touch with you all in 2015.