Autumn Budget 2025 — What It Means for the Scottish Property Market
The 2025 Autumn Budget unveiled by the UK Government has stirred up a wave of headlines, especially around tax changes for landlords and high value homeowners. For Scotland, the real picture is more intricate. As many property taxes and income tax powers are devolved, what happens south of the border does not automatically apply up here. This means Scottish homeowners, buyers and landlords face a different reality. For many in Scotland, the bigger shifts may already be underway, through measures taken by Holyrood, rather than in Westminster. Our letting and residential teams have reviewed the budget and lay out what’s changing, what stays the same, and what that means for Scottish property markets.
Which Budget changes apply (or don’t) to Scotland
Income tax changes on rental property (only if Holyrood mirrors them)
- The UK Autumn Budget raises taxes on property income: from April 2027, rental income will be taxed an extra 2%meaning higher, additional (and basic) rate taxpayers’ property income will be taxed more heavily. Source Which?+2Inside Housing+2
- However: income tax is devolved in Scotland. Source Scottish Association of Landlords+1
- Scottish landlords therefore will not be affected unless the Scottish Government decides to match (mirror) that increase when it sets its own tax bands. The next Scottish Budget, due in January 2026, will likely clarify this. Source Scottish Association of Landlords+1
- In short: at present, no automatic rise for Scottish landlords but investors should watch Holyrood’s next moves.
Stamp-duty equivalent (purchase tax): Scotland uses Land and Buildings Transaction Tax (LBTT), not UK Stamp Duty
- Since 2015, property purchases in Scotland have been taxed under LBTT, not Stamp Duty.
- That means UK-wide reforms to Stamp Duty do not apply in Scotland.
- LBTT rates/bands remain a matter for the Scottish Government and Scottish Parliament any changes must come via Holyrood.
So, for buyers or second-home investors in Scotland, the Budget’s purchase tax changes at Westminster do not automatically bite.
Additional Dwelling Supplement (ADS), already higher in Scotland
- Separately, the Scottish Government recently increased the surcharge on second/extra homes (the Additional Dwelling Supplement, ADS) from 6% to 8% (effective 5 December 2024) for purchases of second homes, buy-to-lets, holiday homes, etc. Source Institute for Fiscal Studies+2Scottish Association of Landlords+2
- The rise means landlords or second-home buyers pay considerably more than before on top of standard LBTT. Source Institute for Fiscal Studies+1
- According to industry data, income from LBTT (including ADS) has recently hit records: in 2024, Scottish property taxes raised over £674 million, this is a significant jump from previous years. Source Scottish Financial News+1
- In the 12 months to August 2025, revenues rose again: total LBTT receipts topped £717.2 million, with ADS related revenue accounting for around 31.9% of that total. Source Intermediary Mortgage News
This means investors already face a relatively heavy upfront cost for second homes or rental properties in Scotland a factor that has and will continue to influence buy-to-let appetite going forward.
“Mansion tax” / High-value home surcharge applies UK-wide, but Scotland’s separate tax regime complicates things
- The UK Budget introduces a new annual surcharge on very high value homes (valued over £2 million), to take effect from April 2028. Source Inside Housing+2Which?+2
- Due to Scotland’s property taxation (council tax / LBTT / ADS) being devolved, the presence and implementation of any equivalent surcharge in Scotland would require separate action by Scottish authorities. Source Scottish Government+1
- At present, there is no automatic expectation that Scotland will introduce an equivalent levy on high-value homes. However, activity at the upper end of the Scottish market may still be influenced by sentiment and headlines coming from the wider UK.
What is already changing in Scotland and likely to matter more
Even before the 2025 UK Budget, Scotland has been evolving its own property tax regime with implications landlords, buyers and investors need to heed.
- The increase to the ADS (from 6% to 8%) is already real. This makes second home purchases, holiday lets, buy-to-lets and similar investments more costly. Source Scottish Association of Landlords+2Institute for Fiscal Studies+2
- The proportion of transactions subject to higher LBTT/ADS is substantial. In 2023–24, around 64% of property sales exceeded the £145,000 threshold. Source Institute for Fiscal Studies+1
- As of 2024, Scottish buyers contributed a record high in LBTT receipts; and 2025’s figures suggest continued strong revenue indicating that buying activity remains relatively robust despite higher transaction costs. Source Scottish Financial News+2Intermediary Mortgage News+2
- For many buy-to-let investors and second-home buyers, the increased upfront cost may disincentivise purchases which could over time place upward pressure on rents if supply tightens.
What this means for different types of Scottish property-market participants
First-time buyers / domestic owner-occupiers
If you are buying your main home, the 2025 UK Budget brings no new tax burden directly (at least as far as LBTT and ADS are concerned) because purchase taxes are set by the Scottish Government, not Westminster.
That said, anticipate higher competition from existing homeowners, especially investors or second home owners who may treat their high upfront costs and tax exposure as a reason to exit or shift strategy. That could tighten supply and keep upward pressure on prices in some segments.
Buy-to-let investors & landlords
- The increased ADS already makes acquiring additional properties more expensive.
- The UK Budget’s proposed 2% rise in rental-income tax will not apply to Scottish landlords unless the Scottish Government decides to mimic it but that’s still a significant risk, because it would reduce net yields.
- Combined with other costs (mortgages, maintenance, regulation), some smaller or more marginal landlords may reconsider holding property long-term under a buy-to-let model.
Second-home / holiday-let buyers
- The ADS now at 8% is a clear disincentive — meaning the appetite for purchasing second homes or holiday lets may soften, especially if the purchase is financed.
- If UK-wide “mansion tax” sentiment filters into Scottish markets — even if not automatically implemented — there could be hesitancy among high-net-worth buyers of expensive homes.
Why Scotland’s own tax regime and not the UK Budget is the bigger factor now
Due to the devolved nature of property taxation in Scotland, the immediate “tax environment” is shaped more by decisions made by the Scottish Government (Holyrood) than by the UK Treasury. In other words: for most Scottish landlords, buyers and investors, the 2024–25 changes to LBTT and ADS are already more material than yesterday’s Budget.
It’s worth noting that the ADS increase was justified by the Scottish Government in part as a means to protect opportunities for first-time buyers and curb excessive second home purchases though critics argue it penalises the private rental sector and discourages investment. Source ICAEW+2Institute for Fiscal Studies+2
What to watch and what to plan for (for anyone active in Scottish property)
- Watch the 2026 Scottish Budget (due January) that will show whether the Scottish Government will mirror Westminster’s proposed 2% rise in rental-income tax. That decision could reshape landlord yields and influence investor behaviour significantly.
- Expect transaction costs to stay high for investors & second-home buyers with ADS at 8%, the upfront tax burden is already a major factor, likely to suppress some buy-to-let or second home demand.
- Potential shift in landlord market composition smaller landlords or those with marginal yields may exit, creating room for larger, institutional or long-term investors. That could lead to greater consolidation in the rental market.
- First-time buyer / owner-occupier demand remains central as investors face tighter returns, first-time buyers might find less competition from buy-to-let buyers, supporting owner-occupation demand (though affordability remains a challenge).
- Regional variation matters more than ever the impact will differ across Scotland (Edinburgh vs Highlands vs rural areas), depending on base values, supply, investor interest, and demand for second homes or holiday lets.
In the long view, the 2025 Autumn Budget may catch the headlines but for much of Scotland’s property market, the bigger levers are already controlled locally. With a higher Additional Dwelling Supplement, and LBTT firmly under the Scottish Government’s authority, the real costs and incentives for investors, buyers and landlords are shaped more by decisions made in Edinburgh than by policies in London.
For landlords and investors: now is the time for careful scenario planning run yield analyses, review portfolios, and prepare for possible further tax changes after the next Scottish Budget. For first-time buyers and owner-occupiers: there may be changing dynamics in demand and supply that create opportunities, but affordability pressures persist.
Above all: if you are active in Scottish property whether as landlord, investor, buyer or adviser the coming months are likely to be decisive.
It’s a time to watch Holyrood closely.
