Industry bodies labelled the move by the Scottish government to raise taxes on second homes an “out of touch” measure that would push up rents.
In yesterday’s Budget finance secretary Shona Robison said the additional dwelling supplement would go up to 8% from 6% from today, which would raise £32m in additional revenue in 2025-26.
She added that land and buildings transaction tax rates will be frozen, although a review into this area will be launched next spring to “consider various aspects of the residential and non-residential arrangements” and “will further explore the impact of the additional dwelling supplement where exceptional circumstances or events occur”.
The government says this tax will collect £784m in 2023-24 and is estimated to rise to £1bn in 2025-26.
However, Propertymark head of policy and campaigns Timothy Douglas said: “With huge demand for private rented property and long-term rent control measures contained in the Housing Bill, the Scottish government’s decision to raise additional dwelling supplement under land and buildings transaction tax from 6% to 8% is quite simply wrong and out of touch with the housing needs of Scotland.
“The decision leaves Scotland as the most expensive place in the UK to rent out a property and will further discourage new landlords to take on much needed private rented property to let.”
Scottish Association of Landlords chief executive John Blackwood added that the move is “another blow to landlord investors” amid a “housing emergency” across the nation.
The landlord body welcomed the government’s housing tax review next year and said it would use the opportunity to continue “lobbying for the removal of the additional dwelling supplement, or if it is not to be removed, for exemptions for those purchasing properties which have been empty long term or are being purchased with a sitting tenant”.
In other measures, the Scottish government said the residential nil rate band for first-time buyers will rise to £175,000 from £145,000.
And added that it would allocate £768m for affordable homes, to build over 8,000 properties for social rent, mid-market rent and low-cost home ownership to be built over the next 12 months.
In the October UK Budget, Chancellor Rachel Reeves also increased the stamp duty surcharge on second homes from 3% to 5%, which came into effect the following day.
