Blog

The majority of house moves have been put on hold during lockdown whilst the message in Scotland is still to ‘Stay At Home’. This has put increased pressure on those in the midst of moving, especially those who have ended up with two properties because one has not been able to be sold due to the current restrictions. 

If you own two properties on the date of settlement and you are not replacing your main residence, a tax called Additional Dwelling Supplement (ADS) is payable. ADS, which is currently charged at 4% of the whole purchase price, applies to all transactions involving the purchase of an additional residential dwelling over £40,000, including buy to let investments and second homes.

The current concern for many property owners has been that they may end up paying thousands of pounds in ADS and not being able to claim it back from the Revenue Scotland because their previous main residence has not been able to be sold within the relevant timescale due to the current COVID-19 restrictions. Buyers had 18 months to dispose of their previous main residence and still be eligible for a repayment of ADS. However as of last week, the timeframe has been extended. Under new legislation there will be an increase of 18 months to the period in which some buyers can dispose of a previous main residence and still be eligible for a repayment of ADS, meaning some buyers will have 36 months to sell. 

The new measure will only apply to those buyers who purchased a new main residence prior to 25 March 2020, with an effective date for the purchase of between 24 September 2018 and 24 March 2020. Such buyers will have paid ADS and been unable to dispose of their previous main residence, but were still within the 18 month time limit to dispose of the previous main residence as at 25 March 2020. 

Steps have been announced to get the housing market back moving again. On May 21, the Scottish Government released a document detailing Scotland’s route out of lockdown including steps to reopen the housing market.

It is expected that Scotland will take a more cautious approach than that in England, which is already allowing property viewings. In Phase two (the precise date of which is not yet known), the Scottish Government has said that they anticipate a relaxation of restrictions on housing moves, although what this will look like currently remains unclear. 

The situation is of course changing on a daily basis. In the meantime, people still need places to live and if we can find a way to come to a fair and reasonable solution with buyers / sellers on the way forward, then we will do so.