Revenue from property taxes in Scotland has risen by over 750% in the last ten years, according to DJ Alexander Ltd.
Revenue raised from the land and buildings transaction tax (LBTT) has increased from £7m in April 2015 to £61m in April 2025.
The tax was introduced ten years ago and the seven million pounds raised from 6,880 transactions worked out at £1,017 per property sale. In April of this year the £61m was from 8,100 transactions which is the equivalent of £7,530 per sale.
One year after the 2015 introduction, the Scottish Government extended the tax further to impose an additional dwelling supplement (ADS) on second homes and investment properties. In April 2016 this raised £1.5m but nine years later this figure had risen to a record £22.4m representing 36.7% of all revenues raised in the month.
The 750% increase in revenues from LBTT must be a record for any tax. To increase by that amount over just ten years is extraordinary.
That property taxes are levied more severely in Scotland against first-time buyers (FTBs), those buying homes worth more than £325,001, and second home buyers and property investors displays a major difference in approach between here and the rest of the UK.
The attitude is that these are all fair targets and can be taxed at a much higher rate than their counterparts south of the border.
The growth in the numbers is unbelievable and tells its own tale of how insidious the growth of this tax has been. Since April 2015 – the first month this tax was collected – there were 6,880 transactions and £7m was collected which equates to just £1,017 per sale. By April 2025 £61m was collected from 8,100 transactions which is equivalent to £7,530 per property sold. I am sure that when this tax was devised such numbers would have been unthinkable.
Have any other taxes or prices have risen by so much in such a short space of time? Obviously not but this doesn’t seem to deter the Scottish government who believe that this tax hits those with the broadest shoulders. This is defined as those who buy a property with a value greater than £325,001 when the 10% LBTT rate applies. In England, this higher rate does not kick in until a property is worth more than £925,000.
But it’s not just those buying a £325,001 home who have the broadest shoulders and must pay more. First-time buyers (FTBs) in Scotland are also treated to higher taxes than their English counterparts. In Scotland LBTT starts at £175,000 for FTB’s whereas in England they don’t start paying property tax until a home costs more than £300,000.
Ministers may argue that if you can afford to buy a £175,000 first home or a £325,001 property then you can afford to pay a higher rate of tax. It is doubtful, however, that this is a credible argument given the level of taxation and the starting point. What we have here is a tax which disproportionately punishes Scots homebuyers compared to their near neighbours.
The other element of this tax which galls so many is that there is no obvious use of the money to build more homes or reduce the impact of the current housing emergency. If homebuyers could see some obvious benefits from their generosity in paying these substantial additional sums, then they may be more accepting of this higher taxation. Hypothecating this additional taxation directly into the housing sector could go some way to at least explaining why Scots – at all levels from first-time buyers to other home purchasers – are charged so much more for the fundamental right to have a home. At the moment there is little explanation of why this is occurring and what the money is being used for. Perhaps by the time of LBTT’s 20th birthday we shall have a clearer explanation. In the meantime, we must simply pay up when we buy a home.