How is the new additional dwelling tax working out?
I was at a conference last week which discussed, amongst other things, the current condition of the property lettings industry in Scotland. One of the most interesting things that I heard was the impact, or lack of it , that the new (ish) additional dwelling supplement (ADS) on the rental market.
This tax was brought in April 2016 with the idea being that it would give first time buyers a better deal, with the additional 3% tax putting off the number of investors coming in to buy typically first time buyers properties. To give you an idea, if you buy a property at £90k as a first time buyers you pay no LBTT however as an investor ( assuming this to be a second property) you would pay £2700 in ADS. So has it had the desired effect and opened up the market to first time buyers? I think not.
The market for investors in Glasgow particularly has been red hot for the past 9 months, and the revenue take from this new tax has tripled on estimations. The initial per annum estimation was around £30m but estimations are more like £90m! So first time buyers aren’t benefitting but the government certainly are!
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