The Scottish Government has backtracked on plans to hit landlords who bulk-buy properties with an extra three per cent land tax.
The private housing rental sector is dependent on private landlords but Land and Building Transaction Tax (LBTT) reforms would have seen the surcharge applied to all ‘second properties’.
Now following representations by the building and housing industries, the Scottish Government has decided that transactions involving six properties or more will be exempt from the three per cent surcharge.
The change of heart was welcomed by real estate expert, Rodney Whyte, of legal firm Pinsent Masons, who claimed the original proposal would have impacted on the number of new-build developments in the pipeline.
Mr Whyte said: “A vibrant private rented sector is an essential element in solving Scotland’s housing crisis and we need to do more to encourage investment of significant scale.
“The proposed three per cent surcharge on all 'second' home purchases would have been a considerable disincentive to institutional or large scale investors in the private rented sector in Scotland and this change of direction is welcomed.”
Under LBTT rules properties valued between £145,000 and £250,000 attract a two per cent tax with other rates ranging from 5-10 per cent depending on purchase price. In a December announcement Finance Secretary John Swinney announced the three per cent additional levy would apply to all second properties valued at £40,000 and above.
Mr Whyte added: “If the Scottish Government were serious about tackling our housing crisis I would go further and suggest that LBTT rates should actually be reduced for purchases of new-build stock involving six or more properties.”