Chamber and committees

Local authorities are responsible for the administration. More generally—it is not specific to this matter—resource has been provided to local government in recent financial settlements for the reforms that have been implemented due to the Barclay review.

James, do you have anything to add?

As the convener and the committee will be aware, we are in the process of carrying out a review of the ADS and will have more to say about it relatively soon. We are carefully considering the consultation responses, and I will have more to say on that specific issue in due course. I am not currently in a position to go into any further detail on what the outcome of the review will be, but that issue has been considered as part of the review.

We gave that careful consideration as part of a broad review of the ADS that we did last year. It is a complex area, and it is important to get the balance right, but in the near future I intend to bring forward regulations for consultation. Those will respond to a number of the areas that have been raised as part of the review process. It will be a matter for the committee to consider, and I am happy to give further evidence when we are in the position to publish our intentions. We have not finalised our decisions, so I do not want to speculate about what our response will be to the review. However, I assure the committee that we will bring forward those measures quite soon.

What you have referred to would be specific to the ADS. For home buyers, the threshold is £145,000 and £175,000 for first-time buyers. It is important to take into account the distinction between property prices in Scotland and England, too: as of last October, the average property price in Scotland was, I think, around £195,000, whereas it is £316,000 in England.

I would also make the point that our devolved system of LBTT has been in place for some time. Following the pandemic, we have seen significant resilience and recovery in the housing market. I appreciate that, as we move into this year, the combination of the economic headwinds that we face in the wake of rising interest rates and the impact of the mini-budget, which has led to the withdrawal of mortgage products, will have an impact.

Looking at the revenue that we are raising, LBTT is a strongly performing tax and it is forecast to provide a net gain, once the BGA is factored in. The decisions that we take are balanced. We make them to support first-time buyers and to raise revenue, and that is what they are doing.

We are consistent. The policy supports our broader policy on housing in “Housing to 2040”. That is Government policy that is already set out. All our decisions on tax are taken with regard to the wider considerations around Government policy. The approach is consistent and in line with our broader strategic objectives.

With regard to support for the PRS, I ask Ewan Cameron-Nielsen to come in on the exemption for six or more purchases.

Yes. The policy intent is to support first-time buyers. The example that you gave illustrates the impact that the change would have. Somebody who was buying a second property as buy to let at, to use the example that you gave, £100,000 would be liable for the ADS whereas a first-time buyer or a home mover who is not eligible for the ADS would not be required to pay any LBTT because they are under the threshold. As I said, for first-time buyers, it is up to £175,000.

Forgive me, but much of what you have touched on goes beyond my portfolio responsibilities and aligns more with those of Ms Robison and Mr Harvie. However, the answer to your questions about tax and investment in the context of finance and the economy is yes. I do not want to repeat myself, but our tax policy decisions are taken in the context of the budget cycle, the policy cycle and our strategic objectives as a Government. They are not taken in isolation. We are all familiar with and understand the clear policy intent behind the ADS, which is to do with the provision of support for first-time buyers.

Are there any specific points that you want me to touch on, beyond that?

I have to concede that that is a perfectly fair and reasonable point. It had been our intention to have progressed further on the ADS review. However, given the complexity of the ADS review and the importance of being able to provide certainty and get it right, we have taken a bit more time. As I said in my remarks to the convener earlier, we will be producing a response to the review shortly. I look forward to having opportunities for further engagement with the committee on what we produce at that point.

We recognise that second and holiday homes can play an important part in local economies, but we also recognise that they can present many challenges as well, particularly around population retention and affordability. That is why we have taken this approach and why, through the joint working group that is looking at the resourcing of local government, including in relation to council tax, which was established following the Bute house agreement, we are, in conjunction with COSLA, looking at measures that can enhance local authorities’ ability to respond to such issues, including, for example, through the additional council tax supplement for second homes.