Ministerial Statement on Planning and Inclusive Growth

On 5 December 2017, Scottish Minister for Local Government and Housing, Kevin Stewart, stood before the Chamber of the Scottish Parliament to deliver a Ministerial Statement on planning and inclusive growth. He did this in the context of the recently submitted Planning Bill, which has now been laid before Parliament.

Mr Stewart spoke of the need for effective planning in Scotland, both in terms of its impact on communities and the wider economy, and dedicated the Scottish Government to proactively acting and engaging with all stakeholders to achieve this. He also noted the importance of context and argued that Brexit acted as another spur to improving Scotland’s planning process which, despite Mr Stewart acknowledging progress, still, in his view, had much to be improved upon.

Throughout his address, the Minister emphasised the importance of community engagement and the linking-up of different stakeholders and all of civic Scotland. Furthermore, he argued that the Bill currently before Parliament was focused on promoting inclusive, community-oriented growth, and vital to securing investment. Mr Stewart was also keen to stress that the Bill would also help the Scottish Government to achieve its goals in community empowerment and community input, especially, according to the Minister, by creating a statutory link between community and space planning.

While the majority of Mr Stewart’s address focused on the thematic content of the Bill, he did briefly touch upon the issue of short-term lets. The Minister acknowledged that there were concerns in some sectors about short-term lets but cautioned Parliament to listen to the findings of the Expert Panel once they are published, and also called for action only when there is “robust evidence” showing a need to act. There were no further explicit mentions of short-term letting in the Minister’s speech or in the subsequent round of questions.

Also of note was Kevin Stewart’s reiteration that there would be no inclusion of a third party right of appeal in the planning process under the Bill as proposed.

When the question session began, Scottish Conservative Housing and Communities spokesman, Graham Simpson, criticised the Bill for the impact that he foresaw it having on local authorities, particularly in terms of the infrastructure levy in the Bill. However, the Minister refuted Mr Simpson’s concerns, maintaining that local councils would be properly resourced and would not suffer as a result of the Bill.

Labour housing spokesperson, Pauline McNeill, also raised some concerns with the Bill. She raised the issue of remedies for communities who have planning decisions go against them and slammed the Bill as lacking the openness and transparency needed.

Furthermore, Green MSP and critic of short-term rentals, Andy Wightman, took the opportunity to speak during the debate. However, he did not speak about short-term lets specifically but focused on the issue of the third party right of appeal. He argued that the measures proposed would be corrosive to the empowerment of communities in the planning process. The Minister noted his disagreement with Mr Wightman on this issue and claimed that the Bill provided robust protection for local communities in the process.

With thanks to Halogen Communications.

LBTT (Amendment) (Scotland) Bill passes at Stage 3

New legislation introducing a tax supplement on purchases of additional residential properties has been passed by Parliament.

MSPs have voted in favour of the Land and Buildings Transaction Tax (LBTT) (Amendment) (Scotland) Bill – meaning a supplement will now be levied on the purchase of additional homes such as second homes or buy-to-let properties.

The supplement was proposed by Deputy First Minister John Swinney to protect first time buyers in Scotland from potential distortions to the property market in the wake of the Chancellor’s announcement in November 2015 of a similar charge being introduced by the UK Government from April 1 2016.

The LBTT supplement is three per cent of the total price of the property price for all relevant transactions above £40,000 and is payable in addition to the current LBTT rates. It will take effect from 1 April 2016.

Mr Swinney said:

“Our priority is to make sure first time buyers have the greatest possible chance to get a foot on the property ladder.

“That is why I decided to act to avoid any potential distortions that could arise in Scotland from the new higher rates of stamp duty land tax payable on the purchase of additional residential properties, announced by the Chancellor of the Exchequer in his Autumn Statement on 25 November 2015.

“This is particularly relevant to the purchase of additional residential properties, at the lower end of the market, which could make it more attractive to invest in such properties in Scotland compared to other parts of the UK.

“Our LBTT additional homes supplement will ensure that opportunities for first time buyers to enter the housing market in Scotland remain as strong as they possibly can.”

The ASSC submitted to the consultation process, making the point that Furnished Holiday Lettings would be affected. The National Tourism Strategy Tourism Scotland 2020, which the Industry and Government supports, emphasises the importance of continued growth in the tourism sector as vital to the Scottish economy, and this may result in a barrier to growth.

Properties are defined by recent tax rules as a Furnished Holiday Let business if the property is available for 210 days and let for at least 15 weeks of the year.  Properties available for let for 140 days plus pay business rates, not Council Tax. This clearly demonstrates that properties associate with our sector are businesses, and should not be classified as residential.

The ASSC requested that the Scottish Government consider using the thresholds of Furnished Holiday Lets, as defined by the tax rules, to exempt residential properties to be used as Furnished Holiday Lets from the Land and Buildings Transaction Tax (LBTT) supplement of 3%. Disappointingly, this appears to have been dismissed.

Residential property rates

Property value LBTT rate** LBTT rate + supplement*
Up to £40,000 0% 0% + 3% = 3%
£40,000 to £145,000 0% 0% + 3% = 3%
£145,000 to £250,000 2% 2% +3% = 5%
£250,000 to £325,000 5% 5% + 3% = 8%
£325,00 to £750,000 10% 10% +3% = 13%
Over £750,000 12% 12% +3% =15%

* supplement only payable on transactions above £40,000. The 3% supplement would be applied to the whole purchase price and not just the proportion of the price above £40,000.

** the supplement is capable of applying to transactions to which non-residential rates apply where the transaction includes the purchase of a dwelling