MSPs have been warned by the Scottish Association of Landlords (SAL) that an additional charge in regards to buy-to-let properties and second homes could deter investment in Scotland and affect first time buyers.
Under the proposals, experts have warned that proposed supplement of 3% of the total price of properties over £40,000 could also push up rents in the private sector affecting those who could not yet get on the property ladder. The SAL also warned that such a charge will leave first-time buyers worse off if landlords currently looking to invest in properties valued around £160,000-£200,000.
Proposed Change Dangerous to First Time Buyers
Although the proposed changes to the system have been criticised as a way to deter investment, with even holiday homes included in the tax, deputy first minister John Swinney insisted that the move is aimed at helping those who are currently not on the market, do so.
In a statement to the Holyrood committee, the SAL wrote that the changes proposed would have “a huge impact on the buy-to-let market and exacerbate an already serious shortage of properties in many areas”.
The statement added: “We firmly believe that the biggest losers will be the most vulnerable tenants who will now find it even harder to get the accommodation they want at a price they can afford as rents rise in response to a shortage of properties and increasing business costs that need to be met by landlords.
“As laid out by the Commission on Housing and Wellbeing, landlords have a major part to play in solving Scotland’s housing crisis precisely because of the investment they can provide at all levels of the market.
“The Scottish Government should be encouraging more investment by responsible landlords whilst ensuring the highest standards are met, instead of seemingly doing everything it can to dissuade them.
“Reducing investment will only lead to less being spent on improving housing stock across Scotland and create a space for rogue landlords and letting agents who operate outside of the high standards that the overwhelming majority of the sector are rightly held to.”
The news regarding the proposed charge that could damage the potential for buying enjoyed by first-time buyers comes at the same time that a recent study from Halifax highlighted major problems for first-time buyers.
According to a study carried out by them, the average first-time buyer in Scotland needs to save £21,000 for a deposit on the average first starter home costing just over £133,000.
Craig McKinlay, mortgages director at Halifax, said: “Although the average price of the typical first-time buyer home has grown by 10% in the past year, the number of buyers taking that first step on the housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth.”
Buying a Property: Contact Us Today
If you require legal advice regarding the purchasing of a property or for any legal issues that may arise when buying your first home, contact our team of expert solicitors today using our online contact form.