Agent urges landlords to ‘buy Scottish’ as rent controls end
David Alexander believes the end of rent cap and the country's existing tax reliefs will provide landlords with an ‘ideal opportunity’ to invest.
A leading letting agent has urged landlords to invest in Scottish rental property as the country’s rent controls come to an end.
The Scottish government recently revealed it will scrap its temporary rent control legislation on 31st March. The controls were in place to manage the risk of very steep rent increases following the transition away from the short-term rent cap under the Cost of Living Act.
They have allowed most tenants to challenge a rent increase, with a tapering formula being applied which can restrict the level of rent increase.
David Alexander (pictured), Chief Executive of DJ Alexander, says this plus the existing tax reliefs for landlords will now see the country’s rental sector expand, or at least he hopes so.
“With the ending of rent controls this may be the ideal chance for many who have held back from investing in the sector to jump into a market which is experiencing unprecedented demand,” he adds.
Two tax breaks are available to landlords purchasing multiple properties. Multiple dwellings relief (MDR) is applicable for purchases of two or more properties and reduces a landlord’s Land and Buildings Transaction Tax (LBTT).
Big savings
The second tax break is for the Additional Dwelling Supplement (ADS) which is usually charged at 8% but does not apply to purchases of six properties or more.
Alexander says that a landlord buying two properties simultaneously for a combined £500,000 could save around £11,500 in tax.
And if a landlord bought six or more properties to the value of £1,500,000, the tax savings could be as high as £57,500.
This may be the ideal chance for many who have held back from investing in the sector to jump into a market.”
Alexander comments: “With the combination of MDR and purchases of six or more properties eliminating ADS this offers a greater opportunity for landlords and investors to buy into the PRS in Scotland.
“These tax reliefs could, therefore, provide an ideal opportunity for the PRS to grow rapidly in Scotland to service the needs of thousands of tenants currently unable to find suitable properties.”