Buy To Let tax rise - agents angry at damage to rental sector

Letting agents in Scotland are angry at the Scottish Government for increasing the tax surcharge on buyers of buy to lets and second homes. 

From last weekend the Additional Dwelling Supplement which is paid as part of Land and Buildings Transaction Tax on additional properties was raised from four per cent to six per cent.

Timothy Douglas, head of policy and campaigns at the agents’ trade body Propertymark, comments: “Our members in Scotland already tell us of the plummeting desire for landlords to remain in the sector with 68 per cent of letting agents reporting an increase in notices to sell due to ongoing legislative changes. 

“Therefore, it is disappointing to see the blatant disregard for the importance of incentivising investment in the private rented sector by raising the Additional Dwelling Supplement from four per cent to six per cent for additional homes.

“The private rented sector is a key solution to resolve the housing crisis but if the Scottish Government continue with policies that disincentive landlords this will only make the situation worse.”

Propertymark points to an already plummeting desire for landlords to remain in the sector, with 68 per cent of letting agent members in Scotland reporting an increase in notices to sell due to ongoing legislative changes.

The Additional Dwelling Supplement rise, along with other tax rises announced in Scotland, contradicts the SNP manifesto commitment not to change tax rates before the next election to the Scottish Parliament.

The LBTT additional homes change is predicted to raise an additional £34m per year. No other LBTT rates are changing.

The move further differentiates Scotland from the other countries of the UK which now have lower duty levels on buy to lets and holiday homes.

Other tax changes announced by Scottish finance minister John Swinney include one penny on the Higher and Top income tax rates, taking effect from April, maintaining the Starter and Basic Rate bands at their current level, and reduce the threshold at which people pay the Top Rate, from £150,000 to £125,140. According to the Scottish Fiscal Commission this will raise £129m.