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Industry experts have warned that increasing taxes on landlords in Scotland could lead to higher rents for tenants, as pressure mounts on the Scottish government to rule out following England’s lead.
The Scottish Association of Landlords (SAL) and Propertymark have urged ministers not to introduce further tax increases on landlords, warning that the costs could ultimately be passed on to renters.
In the recent Budget for England, Chancellor John Healey announced a further two-percentage-point increase in tax on property and savings income from April 2027, on top of the increase announced last year.
The Scottish government is due to publish its draft Budget on 3 December.
SAL has warned that tenants in Scotland could face an average monthly rent increase of £40 if ministers fail to rule out what it describes as a “tenant tax”.
Ahead of its annual Scottish Letting Day conference in Edinburgh, taking place today, SAL warned that 710,094 people in Scotland could be affected if the Scottish government introduces similar tax measures.
SAL chief executive John Blackwood said: “Scottish ministers have an important decision to make. Either they can pass on this damaging and unfair tax, which will be felt by tenants, or they can choose not to and give everyone living in Scotland’s private rented sector room to breathe.
“At a time when landlords are leaving the sector and household and business costs are rising, it would be a foolish decision to impose this tenant tax on Scotland’s renters and would do nothing to restore confidence in our sector.
“SAL is committed to working closely with ministers and our tenant customers to alleviate pressures, stimulate growth and competition, and ultimately ensure that everyone in Scotland has a home that suits them.”
Propertymark has also called on the Scottish government to avoid increasing taxes on landlords, warning that further rises could discourage investment in the private rented sector.
On its website, Propertymark said: “We urge the Scottish government to use its tax-setting ability to avoid further increases, which add to the pressures facing landlords and weaken the case for remaining in the sector or investing in more homes.
“The Budget should help create the conditions for long-term investment, giving landlords greater confidence to provide the homes Scotland needs.”
Propertymark has called on the Scottish government to cut Land and Buildings Transaction Tax (LBTT) and reduce, then abolish, the 8% Additional Dwelling Supplement (ADS).
LBTT is Scotland’s equivalent of Stamp Duty, paid when buying property, while the ADS is an additional 8% tax applied to purchases of second homes and buy-to-let properties.
The industry body writes on its website: “Higher purchase costs can discourage investment and make it harder for people to move. For landlords, these costs come alongside wider tax and regulatory pressures, with a risk that increased costs feed through into rents.
“At a minimum, ministers must consider an ADS exemption where one landlord buys a property from another, which could help keep homes in the private rented sector (PRS) and provide greater security for existing tenants.
“Preferably, we want to see a full review of LBTT rates and bands to assess whether they have kept pace with wages and house prices. Support for older homeowners who want to move to a home that better suits their needs could release housing equity and help make underoccupied homes available.”
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