‘Second homes tax’ passed into law by Scottish Parliament
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New legislation introducing a tax supplement on purchases of additional residential properties has been passed by the Scottish Parliament.
MSPs voted in favour of the Land and Buildings Transaction Tax (LBTT) (Amendment) (Scotland) Bill following a Stage 3 debate yesterday – meaning a supplement will now be levied on the purchase of additional homes such as second homes or buy-to-let properties.
The supplement was proposed in January by deputy first minister John Swinney to protect first time buyers in Scotland from potential distortions to the property market in the wake of Chancellor George Osborne’s announcement in November 2015 of a similar charge being introduced by the UK government from April 1 2016.
The LBTT supplement is three per cent of the total price of the property price for all relevant transactions above £40,000 and is payable in addition to the current LBTT rates. It will take effect from 1 April 2016.
Transactions of six or more properties were made exempt from the charge last month following evidence provided to Holyrood’s finance committee from the Scottish Property Federation (SPF).
The committee also called for a grace period to allow time for a previous property to be sold and additional reliefs for registered social landlords, local authorities and student accommodation.
Passing the legislation into law, Mr Swinney said: “Our priority is to make sure first time buyers have the greatest possible chance to get a foot on the property ladder.
“That is why I decided to act to avoid any potential distortions that could arise in Scotland from the new higher rates of stamp duty land tax payable on the purchase of additional residential properties, announced by the Chancellor of the Exchequer in his Autumn Statement on 25 November 2015.
“This is particularly relevant to the purchase of additional residential properties, at the lower end of the market, which could make it more attractive to invest in such properties in Scotland compared to other parts of the UK.
“Our LBTT additional homes supplement will ensure that opportunities for first time buyers to enter the housing market in Scotland remain as strong as they possibly can.”
Revenue Scotland will administer the higher rates introduced by this Bill, with support from Registers of Scotland (RoS).
Table 1 : Residential property rates
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