Plans to impose higher council tax bills on homes worth more than £1m could discourage people from moving and create new valuation problems across Scotland, Propertymark has warned.
The Scottish Government is consulting on two additional council tax bands covering properties valued above £1m and £2m.
Illustrative figures suggest homes falling into the proposed Band I could face annual bills of around £4,770, while properties in Band J could pay approximately £7,650.
Around 15,000 of Scotland’s 2.7 million residential properties are expected to fall within the new bands, generating an estimated £12m to £16m in additional revenue before administration costs, appeals and payment deferrals.
MARKET MOBILITY
Propertymark argues the proposals should be considered alongside the wider property tax system, including Land and Buildings Transaction Tax and the Additional Dwelling Supplement.
It warns additional taxation could make it harder for some homeowners to move, including older people living in valuable properties whose incomes have not risen in line with their housing wealth.
Hazel MacIver, Policy and Campaigns Officer at Propertymark, says: “Property taxation has a direct impact on people’s ability to move home.
“If the Scottish Government wants to improve housing-market activity, it needs to look at the tax system as a whole rather than introducing another layer of taxation onto an already complex system.
“Adding two council tax bands to a system that is still based on property values from 1991 risks being little more than tinkering with a system that is in need of fundamental reform.”
VALUATION CHALLENGE
Propertymark also questions how homes worth more than £1m will be identified accurately.
It says higher-value properties can be particularly difficult to assess because transactions are less frequent, homes can differ significantly and some may not have changed hands for decades.
Automated valuations may therefore be less reliable, potentially requiring physical inspections and raising questions about whether sufficient qualified valuers are available, particularly in rural areas.
MacIver adds: “Valuing a £1 million-plus property is not always straightforward. These homes can be unique, may not have been sold for decades and can differ significantly from one another.
“The Scottish Government must have confidence that valuations are accurate and that there are sufficient qualified assessors to carry out the work. Otherwise, we risk a significant increase in appeals, delays and uncertainty for homeowners.”
WIDER TAX REFORM
Propertymark says thresholds could also create cliff edges that encourage valuation challenges or discourage homeowners from making improvements that could push their property into a higher band.
MacIver says: “The Scottish Government has an opportunity to look at property taxation strategically and consider how it can support people to move into the right homes, improve housing quality and stimulate economic activity.
“We are asking the Scottish Government to engage further with the property sector and to consider these proposals alongside wider council tax reform and revaluation, rather than adding further complexity to a system that already needs fundamental reform.”
