Property taxes revenue for the Scottish Government has decreased this year, raising questions about whether the considerable drop — £44.4 million in January and February of 2023 — was a seasonal abnormality or a reaction to recent financial uncertainty. According to DJ Alexander, the biggest rental and estate company in Scotland, they believe it is due to the cost of living crisis.
The largest decrease was seen in property purchases made by individuals, which fell by £39.6 million (or 44%) between the first two months of this year and the last two of 2022. The amount of money collected from second-home buyers, landlords, and real estate investors—who pay an additional 6% on top of the ordinary LBTT—fell by £5.0 million (down 15.1%).
David Alexander, CEO of DJ Alexander, said: “The property boom appears to have come to an end with its consequent impact on revenues for the Scottish government. It is highly likely this reduction will persist throughout this year and may even fall further depending on how well the housing market holds up, given the cost-of-living situation, utility costs, and the continued impact of high inflation."
He further commented: “The Scottish government, like all governments, has long regarded the homebuyer and the property investor as a cash cow. But with just £50.9m raised in February (which is the lowest monthly figure since May 2021) and the likelihood of a potential shortfall in revenues this coming year of around £200m, clearly, this source of income may be drying up."