Landlords and letting agents have slammed the extra BTL tax rise in the Scottish budget which they believe could backfire on the government.

MSPs have voted through the legislation for 2025-26 which the Conservatives have labelled the “heaviest tax burden in the history of devolution”.

While most of the tax and spending plans are due to take effect from the beginning of April, the Additional Dwelling Supplement (ADS) – part of Land and Buildings Transaction Tax (LBTT) – was hiked from 6% to 8% last December.

ADS is payable on purchases of all relevant residential properties above £40,000 and the tax rise is forecast to raise £32 million in additional revenue in 2025-26.

Timothy Douglas, head of policy and campaigns at Propertymark, doesn’t agree with the decision.

“The Scottish government’s Budget has failed to implement policies that can help meet the demand for private rented property and with Scotland’s landlord taxes now the highest in the UK, this will do nothing to tackle Scotland’s housing emergency and reduce rents for tenants,” says Douglas.

More difficult

Scottish Association of Landlords’ chief executive John Blackwood (pictured) doesn’t believe it makes any sense to make it more difficult for landlords and prospective landlords to deliver flexible, reliable homes during a housing crisis.

“This makes the tax hike in the Budget even more disappointing, it will put landlords off and make them more likely to leave the industry, pushing supply down and rents up,” he tells LandlordZONE.

“Policymakers should be encouraging landlords to deliver more homes by investing and growing their portfolios, not curtailing our reach with punitive tax hikes on a sector that is already under significant strain.”

The Scottish government has promised to conduct a review of LBTT including the impact of the ADS where exceptional circumstances or events occur and says it will “engage extensively with stakeholders” throughout this process.