Scottish finance secretary John Swinney has announced a tax rise on buy-to-let properties and second homes to make it easier for first-time buyers to get on the housing ladder. Swinney told the Scottish Parliament that a 3% surcharge on property valued above £40,000 will be introduced, payable in addition to the Land and Buildings Transaction Tax. […]
Scottish finance secretary John Swinney has announced a tax rise on buy-to-let properties and second homes to make it easier for first-time buyers to get on the housing ladder.
Swinney told the Scottish Parliament that a 3% surcharge on property valued above £40,000 will be introduced, payable in addition to the Land and Buildings Transaction Tax.
The plan was unveiled in a pre-election budget today and follows the move by George Osborne in last month’s Autumn Statement to increase stamp duty.
Swinney said legislation would be brought forward to ensure that it is effective from 1 April next year.
The Land and Buildings Transaction Tax (LBTT) was introduced earlier this year as a replacement for stamp duty.
For transactions up to £145,000 the LBTT rate is 0%. Between £145,000 to £250,000 it is 2%, moving up to 5% for homes valued from £250,000 to £325,000. From £325,000 to £750,000 the tax is 10%, while the top rate is 12% for properties above £750,000.
Swinney told SMPs: “I am however conscious of the issue of second homes. We need to ensure that the opportunities for first-time buyers to enter the market in Scotland are as strong as they possibly can be.
“And we need to make certain that tax changes elsewhere in the UK do not make it harder for people to get on the property ladder. That is why I today announce my intention to introduce a supplement to Land and Buildings Transaction Tax for those purchasing an additional home for £40,000 or more.”
Swinney said the existing rates and thresholds for Land and Buildings Transaction Tax for residential, non-residential and lease transactions would be maintained.
John Blackwood, chief executive of the Scottish Association of Landlords, said: “Landlords will be disappointed and frustrated by the decision by the finance secretary this afternoon to copy the policy of the Conservative Party at Westminster and punish those who choose to invest in the private rented sector Scotland.”
He warned the tax would have a huge impact on the buy-to-let market and exacerbate an already serious shortage of properties in many areas.
“We firmly believe that the biggest losers from today’s statement will be tenants who will now find it even harder to get the accommodation they want at a price they can afford,” said Blackwood.
“As laid out by the commission on Housing and Wellbeing, landlords have a major part to play in solving Scotland’s housing crisis precisely because of the investment they can provide at all levels of the market. The Scottish government should be encouraging more investment by responsible landlords whilst ensuring the highest standards are met, instead of seemingly doing everything it can to dissuade them,” he added.
