17th December 2015


I was very disappointed to see Scotland’s Finance Minister, John Swinney, announcing that there would be an additional supplement of 3% for people buying second homes.  I had hoped that he would not follow George Osborne’s ill-thought-out plans in relation to this extra charge.  As readers of previous blogs know, I am all in favour of some form of property tax or changes to Capital Gains Tax to help create a property fund that could be used to provide a safety net for people trying to get on the housing ladder in times of economic slowdown thus preventing an over-heating of the market. My view of John Swinney’s recent announcement is that it is a further statement of the Scottish government’s intent to destroy property ownership as an aspiration for the Scottish population.   I am also fearful that there will be some unintended consequences.  As always with these things, the devil is in the detail and at this stage we have very little detail.  Here are some of my questions/concerns:-

  1. When does a second home become a second home? I have recently acted for clients who, due to personal circumstances, used bridging finance to purchase their new property.  This means that for two to three months they can move at their leisure, getting their new house the way they want it before they have to leave their old house.   Would this be a second property?
  2. I frequently act for mums and dads who are keen to assist their children getting on the property ladder or perhaps wish their student son or daughter to live in their own accommodation. Will this class as a second home?
  3. What will the impact be on the buy-to-let investor who is looking to buy a £70,000 property and is suddenly having to find an extra £2,100 of LBTT? Given the requirement for a 30% deposit, my suspicion is that this will not cause a drop in the price, it will simply mean that there will be less purchasers which will mean less properties available, causing an increase in rents.
  4. Does this legislation apply to limited companies?

I would urge John Swinney to re-think and come up with a plan that enables him to control the housing market but in a way that supports the aspiration of property ownership.

Lindsay Darroch
Partner – Head of Property 



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