An extra charge for buy-to-let properties and second homes could deter investors, exacerbate property shortages and disadvantage first-time buyers, MSPs have been warned.
Landlord and property organisations told Holyrood’s finance committee the supplement of 3% of the total price of properties over £40,000 could also push up rents in the private sector.
Finance Secretary John Swinney said he wanted to ensure opportunities for first-time buyers “are as strong as they possibly can be” when he announced the move in his December draft budget for 2016/17.
It followed a similar decision by Chancellor George Osborne in November’s UK Autumn Statement.
The charge will be paid on top of the land and buildings transaction tax (LBTT), which replaced UK stamp duty last April.
The Scottish Association of Landlords wants the 3% rate to be lowered and the purchase price threshold raised in order to help attract investment to Scotland, which it says already has a “less favourable” legal framework for landlords than in the rest of the UK.
Chief executive John Blackwood told the committee: “We won’t have a level playing field because of the framework of regulation that we have here in Scotland, so investors will view that differently.
“We’re concerned about the future, we know we need to increase investment, however we do that, and Scotland needs to become a more attractive place to invest in the future.”
He said the policy could potentially leave first-time buyers worse off if landlords currently looking to invest in properties at around the £160,000 to £200,000 mark began to move into lower price brackets because of the tax.
In a written submission to the committee, the Scottish Property Federation said it was “puzzled as to why the Scottish Government has moved away from its principled stance of progressive taxation”.
Vice-chairman Paul Curran backed calls for exemptions from the charge, particularly for larger-scale investments.
He said: “The large majority of private development finance now comes from either overseas or large UK institutions.
“So, that waterfall effect of funding into Scotland particularly on things like large-scale PRS (private rented sector) is going to be impacted if we don’t have an exemption.”
Daryl McIntosh, business development executive at the National Association of Estate Agents, said it was a “big concern” rents could rise or property maintenance suffer as a result of landlords trying to recoup the cost of the supplement.
Marian Reid, deputy director of the Chartered Institute of Housing Scotland, also raised concerns about potential “unintended consequences” of the move.
“That’s why we are recommending that it is definitely important to have a review period and actually monitor how this would work on the ground,” she said.