The Scottish Government’s revenue from property taxes has slumped this year, prompting speculation as to whether the significant fall – £44.4m in the first two months of 2023 – was due to a seasonal blip, or a response to increased caution caused by recent financial uncertainty. That’s according to DJ Alexander, the largest lettings and estate agency in Scotland. The biggest fall occurred among people buying a home for themselves which saw a drop of £39.6m (down 44 per cent) comparing the first two months of this year with the last two of 2022. Revenue from second home buyers, landlords, and property investors (who pay a six per cent premium on top of standard LBTT) fell by £5.0m (down 15.1 per cent).

CEO David Alexander comments: “The property boom appears to have come to an end with its consequent impact on revenues for the Scottish government. It is highly likely this reduction will persist throughout this year and may even fall further depending on how well the housing market holds up given the cost-of-living situation, utility costs, and the continued impact of high inflation.


"Interestingly, second home buyers, landlords, and property investors have remained more active purchasers than homebuyers. They contribute more per purchase than anyone else given the additional six per cent Additional Dwelling Supplement applied to these buyers and it will be interesting to see if the recent hike in tax in the Scottish budget negatively impacts activity in this market.

“The figures could also be a sign of a greater shift in the market – and if this represented a more permanent fall in revenue from property taxes, then the Scottish Government will face a shortfall in its projected earnings for the coming year.”

He concludes: “The Scottish government, like all governments, has long regarded the homebuyer and the property investor as a cash cow. But with just £50.9m raised in February (which is the lowest monthly figure since May 2021) and the likelihood of a potential shortfall in revenues this coming year of around £200m, clearly this source of income may be drying up.

“One action which the government in Scotland could do to raise revenues would be to make house buying more attractive for the homebuyer and the investor by reducing the taxation on each sale to ease costs at a time when the market is being squeezed. This was introduced in England last year as a means of supporting housing while there remains a downward pressure on the market. If property taxes were reduced to match England rates this policy would have a positive impact on the Scottish market.”


Following the success of its first-time buyers’ event in October last year, ESPC is hosting another free of charge event on 30 March at 107 George Street, Edinburgh, from 5.30pm to 7.30pm.

Designed to cover all the bases a first time buyer needs to know, there will also be an opportunity to talk to solicitors and mortgage advisors in one-to-one sessions – and learn more about the property market in Edinburgh, the Lothians, and the Scottish Borders from ESPC experts.

The property portal’s latest data shows the average selling price of a first-time buyer property from December 2022 – February 2023 was £156,821.