A new property tax grab is a “further disincentive” to investors and will impact the entire housing market in Tayside and Fife.
Property professionals in Tayside and Fife have criticised an increase in the second homes tax from 4% to 6%.
The increase the second homes element of the Land and Buildings Transaction tax from 4% to 6% applies to buy-to-let landlords as well as holiday home owners making a new purchase.
Local experts have expressed concern about the impact this will have on the private rental sector where there is already a lack of supply and rents are spiralling higher.
‘Another nail in the coffin’
Dundee landlord and letting agent Struan Baptie, who manages hundreds of properties in the city, said it is “another nail in the coffin”.
Mr Baptie said: “That’s going to have a real affect on buy-to-let landlords.
“There’s a massive demand for rental stock – we can’t get enough units to let – so supply is minimal.
“For buy-to-let landlords looking at buying a property, this is going to put them off.
“Between this, the increased interest rates, all the costs to run a property, mortgage rates. It’s another nail in the coffin.”
Mr Baptie said he expected the majority of people considering buy-to-let properties in Dundee to now rethink.
He said there remains a need for firms like his to provide rental properties.
“Dundee City Council has a huge housing waiting list,” he added.
“There are huge requirements on the private sector to provide stock.
“This will deter clients from buying a buy-to-let property. It’s just another hurdle to clear.
“As a landlord and a letting agent, it’s a real blow.”
Mr Baptie said it could lead to a drop in property values which could be good news for first time buyers but not current homeowners.
New tax will make rental situation worse
His views on the impact on the market were echoed by Dundee mortgage advisor Kessar Salimi.
He said: “It’s not good news at all. There’s a huge shortage of rental properties as it is and this is only going to make the situation worse.
“I think it will mean fewer property investors buying in the area, especially with the shortage of properties – particularly for students.”
Meanwhile, David Alexander, chief executive of DJ Alexander Scotland, said it was a “further disincentive” to landlords, investors and second homeowners.
Mr Alexander, who runs the largest estate agency in Scotland, added: “The policy of targeting the private rented sector continues.
“Yet there is no evidence that the Scottish Government has any plan in place on how to replace the 340,000 properties and the 700,000 tenants who live in these homes.”
