John Swinney urged to rule out replicating 'punitive' landlord tax hike in Scotland
It comes after a tax increase was announced as part of the UK Budget
John Swinney has been urged to rule out replicating a “punitive” tax hike on private landlords in Scotland.
Scottish Conservative leader Russell Findlay warned the move would “further damage” the rental market north of the Border.
It comes after Chancellor Rachel Reeves announced a 2 per cent increase to the basic, higher and additional rates of property income tax from April 2027.
This only applies in England, Wales and Northern Ireland. But the UK Ggovernment said it would engage with Scottish ministers “to provide them with the ability to set property income rates in line with their current income tax powers”.
The Scottish Association of Landlords (SAL) urged the SNP Government not to frighten landlords off with “punitive tax hikes”.
Speaking during First Minister’s Questions in Holyrood, Mr Findlay said the Scottish Government “cannot be trusted” when it comes to tax rises.
He said: “And one group who is increasingly concerned is the Scottish Association of Landlords. They say that Rachel Reeves’ new property income tax could be the final straw, and that this could harm tenants by jeopardising the supply of rental properties.
“Rachel Reeves has handed the SNP the power to introduce and to even increase this tax in Scotland. Given the damage that has already been done by the SNP’s rent controls, does John Swinney accept that this new tax could further damage the rental market for tenants?”
Responding, Mr Swinney said: “The Scottish Government has put forward legislation, which has been approved by Parliament, that introduces rent controls, but also enables Scotland to be an attractive market for housing investment, and that is demonstrated by the dialogue the government is having with the investment sector. And, of course, any decisions about these issues will be set out in the Budget in January.”
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John Blackwood, chief executive of the SAL, warned against any tax hike.
“Introducing a property income tax could be the final straw for many private landlords,” he said. “The increased level of financial strain makes operating margins increasingly fragile for those investing in the private rented sector.
“With around 90 per cent of landlords in Scotland owning just one or two properties, this might mean that being a landlord is no longer financially viable.”
He added: “The Scottish Government now needs to consider whether to follow suit and introduce similar tax changes in Scotland. However, such a move will prove equally unpopular with already nervous investors and no doubt further exacerbate Scotland’s housing emergency.
“Now, more than ever, the Scottish Government needs to work with landlords to keep them in the sector, rather than frightening them off with punitive tax hikes.”
Elsewhere, Mr Findlay urged the First Minister to use any savings generated by the removal of the two-child benefit cap across the UK to reduce income tax in Scotland.
“The SNP are forcing Scottish taxpayers to constantly pay more and more and more,” he said. “Before the Budget, they had already set aside around £150 million to end the cap on Universal credit for families with more than two children.
“But given Labour’s decision to scrap the two-child cap, the SNP can now spend that money on something else - and not on more benefits.”
He added: “Will John Swinney instead use that £150 million to cut income tax?”
Mr Swinney said any savings in this area would be spent on measures to reduce child poverty.
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