Property chiefs call for more homes after Greens tax rise defeat
Currently it is 8% of the cost of the property but the Greens wanted it raised to 16% in areas where there is a housing shortage arguing that it made sense for the government to be able to change the tax in particular regions rather than having to make any change nationwide.
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SNP ministers reject proposal for major tax rise on second homes in tourist hotspots
Their demand was made more than a year after the Scottish Government declared a housing emergency with the Greens arguing the higher ADS rate would reduce the number of homes being bought for holiday use - allowing more properties to be bought by people living locally.
In Scotland, councils have been able to impose up to double the council tax on second homes since April last year with the policy aimed at addressing housing availability by encouraging more homes to be used as primary residences.
Critics say the policies only allow the wealthy to own second homes and prevent the less well off middle class from buying holiday properties.
David Melhuish, director, the Scottish Property Federation, told The Herald the solution to a shortage of homes in some areas was to build more homes - not tax second buyers.
The Scottish Property Federation want more homes to be built. (Image: PA)
'The ADS is already nearly double the equivalent rate for Stamp Duty Land Tax (SDLT) and this is complemented with additional charges for council tax on second homes.
"The proportion of second homes has been reducing for some time in Scotland and is now around 1%, so while this will vary from one area to another, we do not think that it really is the main issue.
"The reality is we have simply to deliver enough new homes, including affordable housing, across the country. This past year 19,000 were delivered across all tenures in Scotland when at least 25000 need to be completed year on year to make progress on addressing the housing emergency announced by the Parliament."
Brian Moran, Scottish housing expert and Advisory Panel Member at Propertymark, the leading membership body for property agents, said the decision not to further raise the ADS would help investment.
He added: "Propertymark has long said that the Scottish Government must review all costs and taxes impacting private landlords in order to understand the impact on rent levels and introduce pro-growth policies that support the need for housing up and down the country.'
The Scottish Greens' Ross Greer, the party's finance spokesman, had put down the ADS proposal as an amendment to the Housing Bill, which is currently going through Holyrood.
It was among more than 400 amendments to the legislation which were debated by MSPs on Holyrood's local government, housing and planning committee.
The legislation will be voted on later at its final parliamentary stage - stage three - in the Holyrood chamber and if passed would allow councils to create rent control areas where rent is capped to certain levels.
Ministers have tabled an amendment proposing that rent rises are capped to the rate of inflation plus 1% to a maximum of 6%. They have also set out exemptions to this rule.
The Scottish Government has also set a target date for local authorities to make market assessments and recommendations on whether or not to introduce a rent control area. The new date is May 31 2027.
Many in the property sector are opposed to rent controls arguing the measures may lead to fewer properties to rent by prompting landlords to sell up.
Mr Melhuish added: "We think there are signs of progress on investor perspectives since the government amended the Housing Bill but this needs to be encouraged further in the remaining stages of the Bill and wider initiatives outlined in the Housing investment Task Force report published last week.'
A spokesman for social justice secretary Shirley-Anne Somerville said last week decisions over ADS levels were made at the Scottish Budget.
'A number of amendments to the Additional Dwelling Supplement (ADS) were put forward at Stage 2 of the Housing (Scotland) Bill. The amendments were not passed. Decisions on the rates and bands of Land and Buildings Transaction Tax, including the ADS, are taken centrally as part of the Scottish Budget process," he said.
The Scottish Government has been approached for comment.
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