The Scottish equivalent of Stamp Duty, Land Buildings Transaction Tax (LLBT), could be raised to 4% for those buying additional properties north of the border.
On Wednesday (12th December), the Scottish Finance Secretary, Derek Mackay, proposed a 1% hike on the tax payable when purchasing buy-to-let properties or second homes.
Mackay set out his plans for tax and spending for the year ahead at Holyrood, as part of the Scottish Budget, which included the proposal to increase the surcharge on LLBT for additional properties from 3% to 4%.
If the Scottish Government approves the proposal, the rate hike will be introduced from 25th January 2019.
However, the 4% surcharge will not apply if the contract for a property transaction was entered into before 12th December 2018.
The proposed hike would mean that a buy-to-let landlord purchasing a property in Scotland for £250,000 would see their LLBT bill increase from £9,600 to £12,100.
Several property experts have expressed their concerns over the adverse effect that LLBT is having, following its introduction in April 2015, especially on the middle to upper end of the Scottish property market.
There is also plenty of evidence to suggest that LLBT is placing upward pressure on rent prices, as Brian Moran, the Lettings Director at Your Move Scotland, explained back in June: “Rents are rising rapidly as a result of the LLBT surcharge for buy-to-let properties.
“This tax hike has dissuaded landlords from investing in the sector, leading to a shortage of homes to rent, compared to the demand for housing.”
He continued: “With the limited supply of rental properties, potential tenants have been forced to compete to secure homes, pushing up rents.
“The introduction of this anti-landlord legislation from Holyrood has ensured the cost of the policy has hit tenants hardest.”
Landlords must note that the Scottish LLBT is separate to the 3% Stamp Duty surcharge introduced by the Government back in April 2016.