Propertymark warns council tax proposals in Scotland could hit older homeowners

Propertymark has warned that proposed new council tax bands in Scotland would place an additional tax burden on homeowners, describing the plans as “simply tinkering with a system that needs fundamental reform”.

The property industry body has responded to the Scottish government’s consultation on introducing higher council tax bands for high-value properties.

The proposals would create two new council tax bands for properties valued at more than £1 million and £2 million.

Under the proposed changes, properties in the new Band I could face an annual council tax bill of around £4,770, while those in Band J could pay around £7,650 a year.

Needs fundamental reform

According to the Scottish government, 15,000 properties out of approximately 2.7 million residential properties in Scotland would fall into the two new bands. The additional revenue is estimated at between £12 million and £16 million.

Hazel MacIver, policy and campaigns officer at Propertymark, said: “Property taxation has a direct impact on people’s ability to move home. If the Scottish government wants to improve housing-market activity, it needs to look at the tax system as a whole rather than introducing another layer of taxation onto an already complex system.

“Adding two council tax bands to a system that is still based on property values from 1991 risks being little more than tinkering with a system that is in need of fundamental reform.”

Valuing property is not always straightforward

Propertymark also raised concerns about how properties worth more than £1 million would be identified and valued.

The organisation said accurate assessments could require on-site inspections to establish the condition of a property and identify modifications that could affect its value. It also questioned whether there would be enough qualified valuers to undertake the work, particularly in rural areas.

Ms MacIver added: “Valuing a £1 million-plus property is not always straightforward. These homes can be unique, may not have been sold for decades and can differ significantly from one another.

“The Scottish government must have confidence that valuations are accurate and that there are sufficient qualified assessors to carry out the work. Otherwise, we risk a significant increase in appeals, delays and uncertainty for homeowners.”

Long-term difficulties for homeowners

Propertymark has also warned that the proposals could create difficulties for long-term homeowners whose property values have risen significantly without a corresponding increase in income.

Older homeowners may find themselves asset-rich but cash poor, facing higher council tax bills simply because of their property’s value. Moving to a smaller home may also be difficult, with LBTT adding to the cost of buying another property.

Timothy Douglas, head of policy and campaigns at Propertymark, said: “The council tax (Scotland) Bill will introduce two additional bands for the mansion tax, targeting a small minority of properties while risking disputes over valuations and administration.

“Rather than reforming individual property taxes in isolation, the Scottish government should look at taxation across the housing market. Cutting LBTT and the Additional Dwelling Supplement would help remove barriers to moving, support affordability and generate wider economic activity.”