Home buyers deliver 66% surge in tax revenue
The Scottish Government has benefited from a surge in tax revenue from the booming property market, according to new data.
Income from the land and buildings transaction tax (LBTT) has surged by 66% in the last 12 months compared to 2019.
Revenue generated from the LBTT rose from £365.6m in the year to May 2019 to £607.5m in the 12 months to May 2022.
However, this level of growth is unlikely to be maintained as prices of homes soften and demand slows amid the squeeze on budgets.
Analysts also expect the market to ease to more normal levels after a sharp rise in activity caused by pent-up demand during the two years of lockdown restrictions.
Within this overall figure, the percentage of tax paid by landlords, property investors, and second homeowners has risen by 70.3% over the same period increasing from £98.1m in May 2019 to £167.1m in May 2022.
David Alexander, chief executive of estate agent DJ Alexander, part of the Lomond Group, said: “These figures highlight just how substantially homeowners, landlords, and second homeowners now contribute to the Scottish Government’s coffers.
“The LBTT is a major earner for the Government and increasingly those who have to pay the additional dwelling supplement are providing a greater percentage of the overall tax take.”
He added: “There is little doubt that the property market has been booming over the last few years and this has provided invaluable income for the Scottish Government during the difficult period of the pandemic.
“Their own forecast is for LBTT revenues to be maintained at a similar level over the next five years and continue to increase, albeit at a slower rate.
“Whether this income remains as high could be in doubt if the Scottish Government continue to negatively target landlords and investors in Scotland.”
He concluded: “The property market is undoubtedly a cornerstone of the Scottish economy, and these revenue figures highlight just how much tax is being provided by homeowners and investors.
“But the market is fragile, and we are seeing signs of a softening of prices and a lessening of demand as interest rates rise, the cost-of-living crisis continues, and utility and fuel bills soar. It will be interesting to see where these figures are a year from now.”