Council tax reform: property industry welcomes council tax reform but warns underlying tax proposals will harm developers and landowners

2 Mar 2016

Policy area: Taxation

Scotland’s property industry has welcomed today’s announcement by the Scottish Government of a new package of measures on council tax as a step forward, including a reformed cap on council tax and the ability of local authorities to control their own revenues.

The Scottish Property Federation (SPF) warned, however, that the Scottish Government’s failure to address a potential revaluation of the council tax base or a re-structuring of the existing bands to introduce further higher value bands is disappointing.

David Melhuish, director of the Scottish Property Federation, commented: “We welcome the reform of the cap on council tax whereby the most expensive homes could only pay three times the level of the least expensive properties - and the fact that local authorities will have more power to control their own revenues – this is long overdue.

“We are however disappointed that there is no mention in the First Minister’s statement of a revaluation of the tax base or a re-structuring of council tax bands, which in our view are fundamentally necessary to making the council tax system fairer and relevant.”

The SPF has also warned that new powers proposed by the Scottish Government to enable councils to levy a tax on development and vacant and derelict land could have far-reaching and negative consequences for business and investor confidence in the property sector.

David Melhuish said: “The most concerning part of today’s announcement is the proposed new tax on vacant and derelict that aims to tackle land banking. We know that in many examples the barriers to development are within the planning system itself and we would urge ministers to avoid measures that disadvantage developers or landowners unfairly.

“There is a risk that such measures will effectively become a tax on development and investment that will penalise many property businesses for a problem which often isn’t of their making.”