Propertymark has called on the Scottish Government to accelerate a review of property taxation and warns that the current system is deterring investment and worsening rental shortages.
The intervention follows recommendations from the Housing Investment Taskforce – set up in April 2024 to explore ways of attracting private capital – which urged ministers to examine all taxes affecting housing.
In its latest Programme for Government, the Scottish Government pledged to encourage investment in critical sectors including housing and has since consulted on how property investment funds interact with devolved tax rules such as Land and Buildings Transaction Tax (LBTT).
The government has also committed to introducing legislation safeguarding the treatment of Co-Ownership Authorised Contractual Schemes (CoACS), which enable investors to claim capital allowances through fund operators.
RENT CONTROLS
But Propertymark warns that reforms limited to investment funds would fall short.
In particular, it urged ministers to revisit the Additional Dwelling Supplement (ADS) – a surcharge on second homes and buy-to-let properties that was raised to 8% in December 2024, up from 3% when it was introduced in 2013.
Timothy Douglas, head of policy and campaigns at Propertymark, says: “Additional taxation and the prospect of rent control areas in Scotland continue to be a huge disincentive for landlords in the private rental market.
“It is positive that the Scottish Government is looking at measures to improve the way in which the Land and Buildings Transaction Tax works for investment funds, but we have consistently called for the Scottish Government to revisit any taxes that dissuade potential landlord investors, which reduces supply and in turn drives up rents.”
He adds: “The Housing Investment Taskforce recommended a review of property taxes, so we await Scottish Government action to open up the debate further and ensure Scotland has a taxation system that allows for housing mobility and where landlords can invest in improvements without having to significantly raise rents and pass costs on to tenants.”
The call comes amid mounting pressure on Scotland’s private rented sector, where landlords have faced tighter regulation, rent controls and higher costs, prompting concern over future housing supply.
