The Scottish Government is facing calls to reconsider its decision to increase the tax on rental properties from 6% to 8%, following a report indicating a significant drop in landlord investments in Scotland amid a deepening housing crisis.
According to a study by Hamptons, an estate agency, Scotland witnessed the lowest rate of landlord property purchases in Great Britain this January, with just 4.6% of homes sold going to landlords, compared to the national average of 9.6%.
This tax increase forms part of the so-called Additional Dwelling Supplement (ADS), ratified quietly during the Scottish budget discussions.
Set to affect all transactions from December 4, the ADS targets the acquisition of secondary residential properties, including rental and holiday homes.
The escalation in taxation has sparked concern among landlord associations, who argue that Scotland now bears the highest landlord taxes in the UK, potentially exacerbating the housing emergency rather than alleviating it.
The Scottish Association of Landlords (SAL) has voiced a strong need for policy revision, emphasizing the adverse effects on the availability and affordability of rental housing.
John Blackwood, Chief Executive of SAL, criticized the policy, highlighting the contradiction it presents against the backdrop of Scotland’s acknowledged housing crisis.
“At a time when the need for flexible, dependable housing is more critical than ever, it seems counterintuitive to deter landlords and prospective landlords,” he remarked.
Blackwood also expressed disappointment over the tax increase, noting that it could discourage landlords from remaining in or entering the market, thereby reducing supply and driving up rents.
He urged policymakers to adopt strategies that encourage landlords to expand their portfolios and contribute more significantly to solving the housing shortage, rather than imposing punitive financial measures that strain the sector further.
