Scottish Budget – 2% increase in ADS

In a further attack on the private rented sector, the Scottish Government announced yesterday that the Additional Dwelling Supplement (ADS) will increase from 6% to 8% with effect from today.

The ADS is an additional charge which is added to any Land and Buildings Transaction Tax (LBTT) which may be due on the purchase of a property. It is charged if you buy an additional residential property (dwelling) in Scotland. Examples of an additional residential property can include a second home, a rental property, a holiday home or properties used by family and friends (even if you don’t charge rent).

Commenting on this announcement, SAL chief executive John Blackwood said:

“Despite the Scottish Government admitting Scotland is in the midst of a housing emergency, they now go and deal another blow to landlord investors by increasing Additional Dwelling Supplement (ADS) from 6% to 8%. 

“Instead of encouraging new investment, they seem to be going out of their way to deter investors from buying from the many landlords who have had enough and are opting to sell. 

“Recently the UK Government in the Autumn Budget decided to increase a similar tax south of the border. Following suit, the Scottish Government is clearly signally to the market they are not interested in new investment in Scotland.”

The government did commit in the budget to conduct a review of LBTT, stating: “The review will commence in Spring 2025 and consider various aspects of the residential and non-residential arrangements for LBTT to ensure their policy intent continues to be met. As part of this, we will further explore the impact of the ADS where exceptional circumstances or events occur. We will engage extensively with stakeholders throughout this process. The review will support decisions in the next Scottish Parliament on whether any legislative changes should be brought forward.”

SAL will use the opportunity of the LBTT review to continue its lobbying for the removal of the ADS, or if it is not to be removed, for exemptions for those purchasing properties which have been empty long term or are being purchased with a sitting tenant.

For further information on the Scottish Budget, please see the latest Scottish Budget Summary by EQ Accountants here.

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