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Should they stay or should they go? We take a look at an independent Scotland’s housing market

Posted on by Rhiannon Merritt


SOURCE: Authors own

It’s the final countdown with one week to go until the big question is asked – will Scotland stay or will they go?
We’ve seen heated exchanges between Darling and Salmond on how Scotland’s income will be generated, the currency that will be used, where their standing will be in the EU etc.
But, one major issue, that affects every Scottish resident’s lives -the housing market, seems to have been directly ignored.
The Scottish Independence referendum is poised to shake up the economic status quo on both sides of Hadrian’s Wall, should those who favour an independent Scotland get their wish.
Recent polls show that there is marginally more support for Scottish independence, so what does the future of the Scottish housing market look like in an independent Scotland?

Will tax on property sales change?

Hmm yes. But this will be the case whether Scotland is independent or not.
In 2013, the Land and Buildings Transaction Tax (LBTT) Act was passed and this is due to replace Stamp Duty Land Tax (SDLT) in Scotland by April 2015.
So how will this affect the price you pay on the purchase of a Scottish home?
Under SDLT homebuyer’s paid a ‘slab’ rate of tax but the new system will introduce a more progressive rate.
Though the bands – which are due to be released at any moment -haven’t been set yet, it is speculated that homes under £300,000 will pay less tax under LBTT and those above will end up paying more than previously.
According to our data there are nearly 2.5 million homes under £300,000 compared with 177,292 which are over. Good news for the majority of Scottish residents, but does this spell trouble for an independent Scotland, who will have less tax coming in from property purchases?

Will properties de-value?

This could very easily happen. Our Chancellor of the Exchequer, Mr George Osborne, has given the no go to Scotland sharing the pound.
How would Scotland’s new currency affect mortgage rates?
Potentially very badly.
It is estimated that mortgage rates would increase by 1-2% in an independent Scotland. The consequences of this could be tragic for the Scottish housing market, with buyers looking for more affordable housing – extremely reminiscent of the UK housing crash in 2008.

Will house sales fall?

Stories have emerged recently of many high-end home buyers inserting clauses into their offers, essentially rescinding the offer if the referendum results in Scottish independence. The fear fuelling these actions seems to be uncertainty on the taxation that would be implemented by an independent Scotland, a factor that is of great importance to more affluent property buyers. The economic loss inflicted by such upper-crust potential property owners fleeing Scotland could have an unpleasant effect on the Scottish property market as a whole.
At Mouseprice, we are already seeing high-value properties becoming available for sale, see below for some examples:
Edinburgh 2
Edinburgh 3
Isle of Skye
Rumbling Bridge

However, research produced by us, has demonstrated that the purchasing of Scottish homes has done anything but slowdown in the run-up to the big vote.
In the months January to July of this year, property sales transactions are continuously increasing, with a peak of 9343 transactions in July.


What will happen to people who own homes but live outside of Scotland?

It has not been mentioned as to whether tax will increase for second home owners if Scotland is to become independent, however border control may have one of the biggest impacts.
There appears to be some fuzziness as to how borders would be controlled, if Scotland is to go it alone.
The Yes Camp reassures us that Scotland is highly likely to join a Common Travel Area (CTA) that will enable Scottish citizens to freely move around the UK and Ireland. This is currently being utilised in Ireland and seems to work effectively.
However unionists say that this idea of free movement is a fallacy and there would unquestionably be border controls.

Scotland’s natural beauty attracts many second home owners. SOURCE: Authors own

So, what about non-Scottish citizens who will want to move to Scotland?
Both independents and unionists both seem to agree that immigration into Scotland would need to increase if Scotland were to be independent. In its manifesto, the Scottish Government says it would take a more liberal approach to immigration and make it easier for students overseas to obtain visas. Theresa May has refuted this claim, stating that Scotland could not be a port for immigrants to access the UK and therefore tight border controls between Scotland and the rest of the UK would be needed.
If Scotland did have tighter border controls, which notable second home owners would find it more difficult to access their Highland hideaways?

The Queen – The Queen regularly visits her Scottish residences including Balmoral and the Palace of Hollyroodhouse.

The Queen could face difficulty accessing her Balmoral residence SOURCE: Bert Kaufmann CC BY 2.0

Bob Dylan – Bob Dylan is the proud owner of a highland holiday home.

Emma Thompson – Emma Thompson often spends the summer relaxing in her Scottish home.

The conclusion

It would appear that the bulk of the commentary on the subject of the property market in a newly independent Scotland is decidedly gloomy, but for now these portents of doom remain solely in the realm of educated guesswork. If you’re contemplating buying or selling a property in Scotland soon, it seem like it isn’t necessary to panic just yet. Though, on the other hand, if you’re confident of a No vote, it seems you’ve got nothing to worry about at all!

Edited by Daiva Smiciute