A high profile lettings agency chief has labelled a revenue-raising property tax as “political posturing.”

David Alexander, chief executive of DJ Alexander Scotland – the country’s largest lettings firm – says property taxes in Scotland raised £699.1m in the last year, mostly from that country’s Land and Buildings Transaction Tax.

LBTT increased 18.6% over the previous 12 months to April 2025 and is £109.4m higher than the previous period between May 2023 and April 2024 when £589.7m was raised. 

Of the £699.1m taxes raised some £211.8m is from the LBTT additional dwelling supplement (ADS) – this is charged on second homes and properties purchased by landlords and property investors to rent. This is 30.3% of the total raised and is £50.8m higher than the previous 12-month period.

The average tax levied per transaction was £21,209.

Alexander says: “Scottish homebuyers continue to be targeted for punitive tax charges on house purchases. That the figure is now nudging £700m a year is extraordinary but there are also serious questions about this as a policy.”

“The Institute for Fiscal Studies (IFS) produced a report called ‘Assessing Scottish tax strategy and policy’ which stated that “Scotland’s increase in the surcharge in land and buildings transaction tax (LBTT) on the purchase of second and rental homes, from 6% to 8%…continued a trend of increases in this ‘additional dwelling supplement’, and “the move makes an already highly economically damaging tax even worse.”

“Despite the publication of a Tax Strategy alongside the Scottish Budget, it is not yet clear what the Scottish Government’s vision for tax policy is – but increases to LBTT are not consistent with any economically sensible strategy.”

He continues: “The IFS understands that the current LBTT policy is simply political posturing which makes little or no economic sense but plays up to the idea that punishing ‘the rich’ is the way forward. The fact that the majority of people who buy a house valued at over £325,000 would never consider themselves rich is irrelevant and does little to address the current housing issues in Scotland.”

“As the IFS report explains: “The change will encourage owner-occupation but will make it even more difficult and expensive for those who remain in the rental sector – tenants (who are likely to face higher rents as a result of the policy) as well as landlords. And the policy does not just penalise the rental sector; it penalises transactions within the rental sector. Preventing a landlord who wants to sell their property to another landlord from doing so is bad for both landlords and tenants.”

Stuart Adam, a Senior Economist at IFS and one of the authors of the report, said: “it is hard to think of any economically rational strategy that would justify recent policy on LBTT, which has made Scotland’s most ill-conceived tax ever bigger and more damaging.”

And Alexander concludes: “Yet these figures are also a sign of just how resilient and lively the Scottish property market is. The large amounts of tax paid by property investors is testament to their faith in the Scottish market. These taxes also do not seem to be deterring homebuyers. But we need a level playing field with our UK counterparts and we need – as the IFS point out – a proper tax strategy in which there is a reasonable explanation of why these taxes are so high and what benefits accrue from them. Or is there another way which does not see homebuyers and property investors as cash cows who can endlessly be taxed. If higher property and income taxes start to deter individuals and companies from future investments in Scotland, then far from being progressive taxation it will be regressive.”