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I can understand your position, but it is somewhat disappointing. Local authorities are concerned that the change is going to impact on them now. As you know, Clackmannanshire Council is the smallest mainland local authority, and yet it says:

“The increase in ADS from 4% to 6% will add a further £50,000 to the cost of our house purchase programme this year and an estimated £204,000 in 2023/24.”

That is not insignificant, as I am sure you can appreciate. The council’s submission goes on to talk about the unfairness of the change and says that it will put “additional pressure on rents” at a time when the cost of living is high.

When are you likely to produce the review? One of the committee’s concerns is that the Scottish Government often tells us that it is going to produce reviews or reforms, and yet the months pass by and we do not see them. To be fair, we get the same from the United Kingdom Government. When will we get a potential change that would benefit local authority tenants?

The Convention of Scottish Local Authorities has said that the increase impacts on its ability to purchase empty properties, for example, which it feels will be detrimental at a time when there is pressure on housing. In its submission, it said:

“There is no obvious policy objective to be achieved by the current arrangements for the payment of LBTT and ADS by local authorities that would justify the different treatment of them and their tenants to RSLs and their respective tenants or the additional costs involved.”

The point that COSLA makes, reinforcing what individual local authorities are saying, is that it will soon have to set rents for next year. The minister is talking about carrying out a review and potentially taking decisions, but without giving a date for a decision. It is therefore quite clear that rents will have to be set without a decision being made by the Scottish Government. I do not understand why there is a difference between RSLs and local authorities.

You have talked about supporting first-time buyers. Where is the evidence that the additional dwelling supplement has helped first-time buyers and encouraged them into the market? Although it might impact on second homes, I am not aware of any evidence that suggests that it actually helps to increase the number of people who are able to get on to the housing ladder in the first place.

I was going to ask what “shortly” meant, so thanks for that.

I understood Douglas Lumsden’s frustration when he said that the views submitted will not have an impact on Government policy. When you make decisions in future weeks, months and years, I hope that you will reflect on some of the issues that have been raised, particularly those that relate to local government.

Agenda item 2 is formal consideration of the motion on the instrument. I invite the minister to move motion S6M-07288.

Motion moved,

That the Finance and Public Administration Committee recommends that the Land and Buildings Transaction Tax (additional amount: transactions relating to second homes etc.) (Scotland) Amendment Order 2022 (SSI 2022/375) be approved.—[Tom Arthur]

As there are no further comments, the question is, that motion S6M-07288 be agreed to. Are we agreed?

Members: No.

Good morning, and welcome to the second meeting in 2023 of the Finance and Public Administration Committee.

The first item on our agenda is an evidence session with the Minister for Public Finance, Planning and Community Wealth, Tom Arthur, on a Scottish statutory instrument. Mr Arthur is joined by Ewan Cameron-Nielsen, who is head of the fully devolved taxes unit at the Scottish Government. I welcome you both to the meeting.

I advise members that I own a flat that I rent out, as per my entry in the register of members’ interests.

I invite Mr Arthur to make a short opening statement.

It seems to me that, when the legislation was put in place, no thought was given to that anomaly. If there are two RSLs, with one run by a local authority and the other by a housing association, it seems daft that the relief applies to one and not the other. We will move on from that, but others might wish to look at it in more depth.

We have received responses from the Scottish Association of Landlords, the Scottish Property Federation and others. Although the theory behind the proposed increase is, as you said in your opening statement, that it will make more houses available to first-time buyers, the Scottish Association of Landlords said that most of its tenants are not in a position to buy, which is why they are in the private rented sector.

The Scottish Association of Landlords said that the increase will reduce the availability of properties in the sector, because it will act as a deterrent to people investing in the sector. The survey of members that it undertook last month revealed that

“44% of landlords are planning to reduce their portfolio size in the next 5 years”

and that

“around 10% of tenants in Scotland will be evicted in the next 5 years so that landlords can exit the sector by selling their properties with vacant possession.”

If the sector has issues at this time, how will what has been proposed help?

Would the Scottish Government consider a couple of areas for which exemptions have been suggested:

“investment in empty and new build properties”

in order to increase the supply of housing stock, and

“properties which are being purchased with a sitting tenant”?

Everyone is aware of rising interest rates and prevailing economic conditions, but the issue that is being raised here—the concern that has been expressed from the market—is that the Scottish Government is not working to mitigate that situation but is going in the opposite direction. For example, Savills has said that the accumulation of measures has reduced the supply of rented accommodation in Scotland such that 29 per cent fewer properties are listed for rent in 2022, as compared with 2016. That is the start of a downward slope, for which no incentive seems to be in place to reverse.

The SPF said that, following the measures, the tax on a home priced at £188,000 would be £12,140, whereas it was £8,380 before the rate change was implemented. In England, it would be £5,640, so the tax in Scotland would be more than double that in England, which could discourage investment in new property in Scotland.