There was bad news for buy-to-let landlords in Scotland yesterday when the Scottish Finance Secretary Derek Mackay proposed a 1% hike on the tax payable when acquiring an additional property north of the border.
Mackay set out his plans for tax and spending for the year ahead at Holyrood yesterday, as part of the Scottish Budget, which included a proposal to increase the surcharge buy-to-let landlords and second home buyers pay on Land Building Transactions Tax (LLBT) from 3% to 4%.
If the proposal is given the go-ahead by the Scottish Parliament, the rate hike will be introduced from 25 January 2019.
But the 4% surcharge will not apply if the contract for a transaction was entered into prior to yesterday.
The change means that a buy-to-let landlord acquiring a property in Scotland for £250,000 will see their bill increase from £9,600 to £12,100.
Several property experts have expressed concern over the adverse impact of the LBTT following its introduction in April 2015, especially on the middle to upper end of the Scottish housing market.
There is also plenty of evidence to suggest that LLBT is placing upward pressure on rents, as Brian Moran, lettings director at Your Move Scotland, explained.
Commenting back in June, Moran said: “Rents are rising rapidly as a result of the Land and Building Transaction Tax 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.
“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.”