The Scottish Association of Landlords (SAL) has called on the Scottish government to refrain from adopting the recent tax increases imposed on landlords in England. With the Scottish Budget due on 13 January 2026, SAL warns that similar tax hikes could exacerbate the housing crisis by discouraging investment in the private rented sector.

Background: England’s Recent Tax Hikes on Landlords

In the Autumn Budget, Chancellor Rachel Reeves announced a two percentage point increase in tax rates on dividends, property income, and savings income in England. This move is expected to raise the tax burden on landlords, potentially leading to higher rents for tenants as landlords seek to offset increased costs.

The UK government has indicated its intention to work with Scottish ministers to enable them to set property income tax rates consistent with their devolved income tax powers. This raises the possibility that the Scottish government might consider similar tax changes in the upcoming budget.

Concerns Over Impact on the Scottish Private Rented Sector

The Scottish Association of Landlords has expressed concern that following England’s approach could have negative consequences for Scotland’s housing market. SAL chief executive John Blackwood emphasised that additional taxes on landlords would worsen the housing crisis rather than alleviate it.

He stated: “If the Cabinet Secretary chooses to follow the Chancellor’s lead by imposing additional taxes on Scotland’s landlords, she will actively worsen the housing crisis.” Blackwood highlighted that many landlords in Scotland are already contemplating reducing their property portfolios or exiting the sector altogether, which would reduce the availability of rental properties.

Rather than discouraging investment through higher taxes, SAL urges the Scottish government to collaborate with landlords to foster a private rented sector that meets the needs of tenants and landlords alike. Encouraging investment is seen as critical to maintaining and expanding rental housing supply.

Implications for Landlords and Agents in Scotland

For landlords and letting agents operating in Scotland, the prospect of increased taxation on rental income could have significant implications. Higher taxes may reduce net rental yields, making property investment less attractive and potentially leading to a contraction in the rental market.

Such a contraction could increase pressure on the existing housing supply, pushing rents higher and reducing options for tenants. Agents may also face challenges as landlords reconsider their portfolios or exit the market, affecting the availability of rental properties to manage.

Landlords should monitor developments closely as the Scottish Budget approaches and consider engaging with industry bodies like SAL to ensure their interests are represented.

Looking Ahead: Scottish Budget and Industry Engagement

The Scottish Budget is scheduled for 13 January 2026, providing an opportunity for the government to set tax policy that supports a sustainable private rented sector. SAL’s position underscores the importance of balancing fiscal measures with the need to maintain investment incentives for landlords.

Industry stakeholders will be watching closely to see whether the Scottish government opts to diverge from England’s tax increases or align with them. The outcome will be critical for the future health of Scotland’s rental housing market.

TLA Trusted Partners Hub Launching in 2026

In related news, The Landlord Association (TLA) is launching a new Trusted Partners Hub in the first quarter of 2026. This initiative will feature verified and approved service providers selected to support landlords, tenants, and property management businesses.

Service providers in legal, trades, insurance, financial, mortgage, tenant screening, and other relevant sectors are invited to register their interest to become TLA service partners. This development aims to enhance the quality and reliability of services available to landlords and agents across the UK.