Scottish property taxes soar to £699.1m

Scotland’s property taxes have surged to £699.1 million in the year ending April 2025, marking an 18.6% increase from the previous period.

That’s according to DJ Alexander, the lettings and estate agency, who say the spike has been driven by the Land and Buildings Transaction Tax (LBTT).

That’s added £109.4 million to Scottish government coffers compared to the £589.7 million collected between May 2023 and April 2024.

A significant portion of the revenue, £211.8 million, stems from the Additional Dwelling Supplement (ADS), a levy on second homes and rental properties, accounting for 30.3% of the total.

The figure is up £50.8 million from the prior year.

Damaging tax on second homes

The firm’s chief executive, David Alexander, said: “Scottish homebuyers continue to be targeted for punitive tax charges on house purchases.

“That the figure is now nudging £700m a year is extraordinary but there are also serious questions about this as a policy.”

He points to a Institute for Fiscal Studies (IFS) report which highlights that the land and buildings transaction tax (LBTT) surcharge on the purchase of second and rental homes ‘makes an already highly economically damaging tax even worse.’

Rising tax burden in Scotland

Notably, properties sold above £325,001 contributed £405.1 million, or 83.1% of the £487.3 million in residential LBTT (excluding ADS), with an average tax of £21,209 per transaction.

Mr Alexander is worried about escalating tax burden on Scottish homebuyers.

He said: “That the figure is now nudging £700m a year is extraordinary but there are also serious questions about this as a policy.

“The IFS understands that the current LBTT policy is simply political posturing which makes little or no economic sense but plays up to the idea that punishing ‘the rich’ is the way forward.”

Tax hikes affect landlords

Mr Alexander also says that most people who buy a house valued at more than £325,000 would not consider themselves rich.

The IFS report also notes that the tax hike discourages rental sector transactions, harming both landlords and tenants by driving up rents.

Despite these challenges, Mr Alexander pointed to the resilience of Scotland’s property market, with investors and homebuyers undeterred by the high taxes.

However, he is calling for a fairer approach and said: “We need a level playing field with our UK counterparts and we need – as the IFS point out – a proper tax strategy in which there is a reasonable explanation of why these taxes are so high and what benefits accrue from them.”

He also warns that excessive taxation could deter future investment and turn progressive policies regressive.