Propertymark has issued a strong warning to the Scottish Government, urging ministers to take urgent action on property taxation if they want to secure long-term investment in housing. The professional body for property agents argues that without meaningful reform, both institutional and private landlords could take their money elsewhere, leaving Scotland’s housing market at risk of reduced supply.
The call comes in the wake of recommendations made earlier this summer by the Housing Investment Taskforce. Established in April 2024, the taskforce was set up to explore new ways of attracting investment into housing and to support the government’s wider 2025–26 Programme for Government. In June 2025, the group recommended that property taxation be subject to a thorough review.
Alongside this, the Scottish Government has committed to introducing new legislation to safeguard the way Co-Ownership Authorised Contractual Schemes (CoACS) interact with the Land and Buildings Transaction Tax (LBTT). These schemes, often used by large investors, provide transparency on income and chargeable gains and allow capital allowances to be claimed through an operator.
A consultation was launched in July 2025 to explore three key issues linked to the interaction between investment structures and devolved tax law. This process was aimed at clarifying technical areas and ensuring that investment funds could continue to operate effectively within Scotland’s tax framework.
Propertymark has welcomed these discussions, but the organisation says such measures are not enough on their own. Instead, it believes that wider reforms are needed to make Scotland an attractive option for investors who may otherwise look to other parts of the UK or abroad.
One of the biggest concerns highlighted is the Additional Dwelling Supplement (ADS), which was introduced in 2013 at 3% but has since climbed to 8% as of December 2024. Propertymark describes the ADS as a major deterrent for landlords and investors, significantly increasing the costs of entering the Scottish housing market.
Timothy Douglas, head of policy and campaigns at Propertymark, emphasised that the combination of extra taxation and the possibility of rent control zones is making the private rental sector increasingly unattractive. He described these policies as a “huge disincentive” for landlords, warning that fewer investors means reduced rental supply, which inevitably drives up rents for tenants.
Douglas acknowledged that it was positive to see the Scottish Government exploring ways to make LBTT more workable for investment funds. However, he stressed that this was only one piece of the puzzle. Without a broader review of property taxation, he argued, Scotland risks losing out on much-needed housing investment.
Propertymark has consistently called on ministers to revisit taxes that discourage landlords from entering or remaining in the rental market. The organisation believes that by reducing or removing disincentives such as the ADS, the government could unlock greater housing supply and create a fairer system for both landlords and tenants.
The Housing Investment Taskforce’s recommendation for a full review of property taxes provides an opportunity for the government to take a fresh look at the issue. According to Propertymark, this is the moment to open up a wider debate on how best to encourage investment while ensuring fairness in the housing market.
A more balanced taxation system, they argue, would allow for greater housing mobility. Landlords would also be able to invest in improving their properties without having to recover the costs by significantly raising rents. This, in turn, would ease financial pressure on tenants and create a healthier rental sector overall.
The current taxation framework, by contrast, risks creating a cycle where fewer landlords enter the market, rental supply shrinks, and prices climb even higher. Propertymark says that unless reforms are made, this trend will continue to worsen.
Another concern is investor confidence. With competing markets in England, Wales, and overseas, Scotland needs to ensure that its tax regime does not appear overly punitive compared with other regions. Propertymark fears that unless ministers act, landlords and developers may increasingly choose to place their money elsewhere.
The organisation believes that reforming taxation is not about giving landlords an advantage, but about creating a stable and sustainable housing market that works for everyone. By ensuring that taxes are proportionate and fair, the government could help balance the needs of tenants with the need to attract long-term investment.
Ultimately, Propertymark argues that the Scottish Government now faces a clear choice. Either it acts decisively to reform property taxation and support the housing sector, or it risks presiding over a market where supply dwindles, affordability worsens, and investment flows out of Scotland.