The coronavirus lockdown has had a massive impact on the residential property market in Scotland. Houses can’t be brought to the market because you can’t have a Home Report prepared. Even if your house was on the market before the lockdown, you’re not allowed to have viewers visit.
Fortunately, new ways of working were found to allow house movers to move out of their old property and into their new home if there was an urgent need and they couldn’t agree a postponement of the date of entry with the other side.
One of the consequences of the abrupt halt to the property market is that people who have bought a new home but haven’t yet sold their existing property have to pay the Additional Dwelling Supplement (ADS). This is an additional tax on property. It’s charged at 4% of the full purchase price. It’s also in addition to any Land & Buildings Transaction Tax that is normally due to be paid. This means it can be very expensive if you buy a new house but haven’t yet sold your own.
You can, of course, reclaim the ADS once you sell your existing house but the time to do that, up until the emergency legislation was passed, was 18 months. With the likely slow return of the property market this might mean that those who sold before the crisis might find it difficult to recover the ADS they paid within that 18 month period.
Recognising this, the Scottish Government included a provision in The Coronavirus (Scotland) (No.2) Act 2020 to extend the reclaim period from 18 months to 36 months – and extension of 18 months to allow property buyers to reclaim the ADS they’ve paid. However this only applies to those buyers who purchased their new main residence between 24 September 2018 and 24 March 2020.
We all hope the market will rebound quickly and we are here to help our clients with the estate agency and conveyancing work.
If you’d like to discuss the marketing, sale and purchase of property, please get in touch with us right away.