The Scottish Budget for 2025-26 has been approved, introducing increased investment in affordable housing and local councils—but a rise in buy-to-let taxes has left industry experts questioning its impact on the private rental sector.
Budget prioritises housing and local services
The Scottish Government has allocated more than £15 billion to local councils, alongside additional funding to tackle Scotland’s housing crisis. Finance Secretary Shona Robison described the budget as a major step forward for public services and economic stability.
“I am pleased that Parliament has approved the Scottish Government’s Budget – confirming plans to invest in public services, lift children out of poverty, act in the face of the climate emergency and support jobs and economic growth,” she said.
She further emphasised: “This is a Budget by Scotland for Scotland. We are delivering a universal winter heating payment for the elderly, providing record funding for local government and increasing investment in affordable housing.”
Higher taxes on buy-to-let purchases spark concern
Despite the funding boost, the private rental sector has criticised the decision to increase the Land and Buildings Transaction Tax (LBTT) surcharge on buy-to-let purchases from 6% to 8%. Letting agents and landlords have raised concerns that this move could further strain an already struggling rental market.
Timothy Douglas, head of policy and campaigns at Propertymark, voiced his opposition to the tax increase: “Propertymark welcomes the investment in affordable housing and money for the Heat in Buildings programme to help more people install clean heat and energy efficiency measures in their homes.
“However, we do not agree with the Scottish Government’s decision, through the Budget process, to increase taxes when purchasing buy-to-let property from 6% to 8%.
Rental supply at risk as landlords face rising costs
The private rented sector has repeatedly warned that increasing landlord taxes could deter property investment, ultimately reducing the supply of rental homes and pushing rents even higher.
Douglas added: “The Scottish Government’s Budget has failed to implement policies that can help meet the demand for private rented property, and with Scotland’s landlord taxes now the highest in the UK, this will do nothing to tackle Scotland’s housing emergency and reduce rents for tenants.”
As landlords weigh the financial impact of the changes, many are questioning whether the increased LBTT surcharge will further drive them out of the sector, exacerbating Scotland’s rental shortage. With demand for rental properties already outstripping supply, will this policy truly achieve its goal of improving housing access—or create additional hurdles for tenants and landlords alike?