Estate agents have voiced anger at the draft Scottish Budget for 2025/26, warning it has "wrong-footed the property investment market overnight".
Finance secretary Shona Robison revealed her draft Budget on Wednesday, with positive news about investment in offshore wind energy, but less welcome news for the hospitality trade.
And now, main players in property have hit out and tax changes which threaten to have a "significant detrimental impact".
Gregor Duthie, legal director at Gilson Gray, explained: “The Scottish Budget announcement has once again wrong-footed the property investment market overnight.
"The rate of Additional Dwelling Supplement (ADS) has been increased from 6% to 8% with immediate effect.
"Whilst the headlines refer to additional charges on ‘second homeowners’, the scope of ADS is much wider and affects small scale buy-to-let landlords, short-term letting owners, and any dwelling being purchased into a company name.
“The increase in the tax being levied on these purchases has a significant impact on investor cashflow, and with changes being brought into effect immediately, buyers are left with little chance to review their model.
“Any transactions which were subject to a concluded contract prior to the budget announcement will be unaffected and will benefit from paying ADS at the previous 6% rate.
"However, for any purchases which are currently in progress, the significant 2% overnight raise will have a detrimental effect and will no doubt be a concern for many investors.”
Meanwhile, Savills predicted the increase in the ADS from 6% to 8% would "further exacerbate" the challenges faced by Scotland's private rented sector.
The change would mean a purchase of a £300,000 additional home would incur a total LBTT bill of £28,600 compared to £22,600 before the change - a 27% rise.
Savills suggested that, against a backdrop of constrained supply, increased taxation and ongoing regulatory changes - such as rent caps - more pressure will be put on the finances of private landlords.
That, in turn, is likely to lead to higher rents, which have already soared by almost 50% in the last five years in Scotland.
Jennifer Young, a partner at law firm Ledingham Chalmers, warned the ADS rise "may deter some buyers, potentially impacting demand and property values".
She said: "The circumstances in which ADS can apply can be complicated, particularly if you are buying as a couple, so checking in with your conveyancing solicitor is highly recommended.
"Companies should also be aware that ADS applies to purchases of residential properties with a transaction value of above £40,000."
Ms Young said the ADS change was expected, according to the Scottish Fiscal Commission, to raise more than £30million iver the 2025/26 fiscal year.
She went on: "As the cut off has now passed, purchasers involved in transactions should speak with their solicitor as soon as possible to understand their position.
"Buyers who later qualify for ADS refunds (for example if they sell their main residence within the relevant period) will need assistance navigating that process too. For any transaction ADS applies to after April 1, 2024, purchasers have 36 months to dispose of their other residential property to be able to reclaim the tax.
"There are no changes to the LBTT residential rates and bands with first-time buyer relief staying in place. This relief sees the nil rate band threshold rise for eligible buyers from £145,000 to £175,000: saving up to £600 in tax."
Meanwhile, Alan Stewart, tax partner at the Aberdeen office of MHA, one of the UK's top accountancy firms, commented on Robison hailing Aberdeen as "perfectly placed to become a global hub for green energy".
Alan said: “What that means, we don’t yet fully know. There was no mention of extra money being directly spent on the North-east and the area is already regarded as a hub as the oil and servicing industry is here.
"There was however welcome news that investment in offshore wind will be increasing to £150million which will help this energy sector.
“Elsewhere, the hospitality industry will take relief from the non-domestic rate position. There did not appear to be direct mention of this for the retail sector, however.”
Rod Hutchison, partner and energy sector lead at Aberdein Considine, welcomed the Scottish government’s plans to treble its investment in the offshore wind sector in 2025.
He said: “Shona Robinson’s draft 2025/26 Scottish Budget has earmarked £150million in additional investment for the offshore wind sector and its supply chain.
"This move, which will help to leverage private investment of £1.5billion for offshore wind infrastructure and manufacturing capacity, marks a further step in the right direction towards transforming the North-east of Scotland into a renewables powerhouse.
"It is very encouraging to see investment going into supporting the growth of our renewables economy which can only help to accelerate our vital energy transition efforts.
“We also greatly welcome the announcement of plans to establish an offshore wind hub in the city. This showcases the government’s increasing confidence in the region, following on from the recent decision to base GB Energy in Aberdeen.
"This new hub will support agencies and industry bodies to streamline what is quite often a complex planning system for offshore renewables projects, ultimately speeding up their deployment. At a time when net zero deadlines are looming, it is heartening to see positive action being taken that will support us in meeting these ambitious targets.”