Landlords body concerned tax changes will stifle investment

Scotland’s largest membership body for private landlords has expressed concern that tax changes announced by the Scottish Government will reduce investment and exacerbate the country’s housing crisis.

SAL has criticised the decision to increase the Additional Dwelling Supplement (ADS) portion of the Land and Buildings Transaction Tax (LBTT) levied when a property is purchased amid complaints from members that it will lead to a decrease in investment and fewer high quality homes being available for rent.

In his budget on 12 December 2018, Scottish Finance Minister, Derek Mackay MSP, announced an increase in the ADS from 3% to 4% from next year. SAL believes this is likely to mean fewer landlords buying and modernising homes across the country due to the increased cost they would face in the purchase.

Statistics show that the tax taken from ADS has doubled since the start of 2018, from £6m in January 2018 to £12.2m in October 2018, the most recent month for which statistics are available, and SAL is becoming increasingly worried that the tipping point at which landlords can continue to absorb such costs will be breached by further increases.

John Blackwood, chief executive of SAL, said: “We know there is a housing crisis in Scotland, as well as public concern about the number of homes available for private purchase.  However, in many parts of Scotland, the only people buying properties and modernising them are private landlords who then make them available for rent which is often the most desired type of housing in these areas.

“We have already seen the tax taken from ADS more than double over the course of 2018 so this latest increase risks landlords being seen as a cash cow for government which they most certainly are not.  Our members, mainly landlords, hold a small number of properties, operate their businesses on very tight margins so any increase in cost is likely to lead to a decrease in investment.

“We want to see effective investment in all types of housing in Scotland, be that new build, social housing or the private sector to ensure the right balance across Scotland which effectively tackles the housing crisis.”

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