Committee support for new property tax


Legislation that would levy a supplement on the purchase of additional residential properties has been given the backing of MSPs on the Scottish Parliament’s Finance Committee today.

The Land and Buildings Transactions Tax (Amendment) (Scotland) Bill introduces a supplement on purchases of additional residential properties in Scotland (such as buy-to-let properties and second homes) over £40,000. As drafted, the Bill would apply across the board to all relevant purchases above the threshold. 

In agreeing to the general principles of the Bill however, the committee has emphasised the need to balance the interests of first time buyers with the needs of those who rent their homes and with the interests of house builders and investors, to protect the supply of new homes.  The committee has therefore called for the introduction of a relief on bulk purchases of six properties or more. 

The committee also noted concerns about the potential impact on the private rental sector through a reduction in the number of homes available for rent and higher rental costs.  The report recommends that it is essential that the Scottish Government closely monitors the impact of the supplement on rent levels especially in areas where rents are already high. 

The report also highlights support for a number other reliefs including for registered social landlords and local authorities, and for student accommodation.

Kenneth Gibson MSP, Convener of the Finance Committee, said: 

“Whilst the committee is supportive of the Bill’s aim to support first time buyers entry into the property market, there are a number of areas that we wish to see addressed as the Bill progresses through Parliament.

“The committee heard concerns, for instance, about the impact on people who rent, whether through choice or necessity. The Royal Institute of Chartered Surveyors has suggested that the supplement could lead to a rise in rents as additional costs are passed on to tenants. We feel that the support given to first time buyers must not be at the expense of those people who rent their homes.” 

The committee’s report also highlights concerns that have been raised by a number of stakeholders about “the limited time that has been made available by the Scottish Government for parliamentary scrutiny of this Bill”. The report’s conclusion acknowledges this and says that it is “essential that the impact of this Bill is closely monitored and that a comprehensive review is carried out once sufficient data is available.”

Mr Gibson, continued: 

“Many organisations have commented on the truncated timetable that this legislation has been subject to. I agree that it is far from ideal, however this is a problem that I would expect to occur with greater frequency as the Parliament assumes more powers and the Scottish Government responds to decisions made by the UK Chancellor that impact on Scotland. There is a need for Parliament and Government to develop a process that allows for transparent consultation and scrutiny whilst recognising that it may occasionally be necessary for swift decisions to be taken on tax matters.”


The Land and Buildings Transaction Tax (LBTT) replaced Stamp Duty in Scotland under the Scotland Act 2012 powers, and came into effect on 1 April 2015. 

The Scottish Government announced its intention to introduce a 3% supplement on LBTT as part of its draft budget for 2016-17, following a similar announcement by the UK Government in its Autumn Statement on 25 November 2015. The LBTT (Amendment) (Scotland) Bill was introduced by the Scottish Government on 27 January 2016 and it is intended to come into effect on 1 April 2016. 

Other recommendations in the committee’s report, include:

  • The Scottish Government should monitor the impact of the supplement and carry out a comprehensive review once sufficient data is available. The Scottish Fiscal Commission should also provide a commentary on the first 6 months of outturn figures for the supplement including an analysis of the impact of forestalling by the end of November 2016.
  • There should be a grace period to allow time for a previous property to be sold.
  • The report asks if the Scottish Government has considered ring-fencing revenue from the LBTT supplement to support help to buy or other areas of investment in the housing sector.


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