7. To ask the First Minister for what reason the Scottish Government has chosen not to extend the reduction to land and buildings transaction tax beyond March. (S5F-04894)

The Scottish Government was clear from the outset that the measure was temporary. It was intended to support the housing market in this financial year and we always said that it would come to an end on 31 March 2021.

The decision takes account of the specific circumstances of the Scottish housing market, which showed record levels of activity under LBTT in the final quarter of 2020. We have seen no evidence of the overall blockages in the market that have been reported in England. From 1 April, the progressive rates and bands will continue to support first-time buyers and others who wish to buy a home. In particular, the first-time buyer relief will mean that an estimated eight out of 10 first-time buyers will pay no LBTT at all. We have taken decisions that we believe to be right for the particular circumstances of the Scottish housing market.

The decision not to extend the reductions to land and buildings transaction tax, similar to the extension of the stamp duty holiday in England and Northern Ireland, is disappointing for Scottish home buyers. Rather than seeing decreased revenues, in December, we saw healthy land and buildings transaction tax revenues, with the highest recorded monthly figure.

That all follows the Scottish Government’s recent closure of the help-to-buy scheme and a 70 per cent cut to the first home fund, which remains closed until April. Now that it has ended those key policies, the Government does not have a comprehensive policy to support young and first-time buyers and those who are low earners. I am particularly concerned about young people buying first homes. Would the First Minister reconsider a more comprehensive approach to ensure that, in making decisions on each of the funds, consideration is given to young buyers and low earners?

The First Minister:

We have taken the right decision on LBTT for the Scottish housing market. For example, in the latest three-month period, which was to the end of January 2021, transactions were 28 per cent higher than they were in the previous three months. LBTT transactions have risen in eight of the past nine months and rose to record highs in four of the past five months. The market looks very different now compared to when the temporary change was made, when transactions had fallen by 41 per cent over the three months to May 2020. It would not make sense for us to continue to design LBTT policy based on the housing market a year ago at the start of the crisis, which was very different.

LBTT is structured in a way that is intended to support first-time buyers. As Pauline McNeill says, we have had additional support for first-time buyers. We want to make sure that the resources that are available to us are targeted as effectively as possible. That means targeting first-time buyers and helping people get on to the housing market for the first time.

I appreciate that those decisions are difficult for people who are directly affected by them. I sympathise, but we have to take such decisions in the round. We are striking the best balance overall.

The Presiding Officer:

We move on to supplementary questions.