Additional Dwelling Supplement and what it means for second home owners in Scotland

Additional Dwelling Supplement and what it means for second home owners in Scotland

Our Oban Estate Agent Andrew Fuller discusses Additional Dwelling Supplement in Scotland.

The Additional Dwelling Supplement (ADS) is a tax measure in Scotland aimed at curbing the acquisition of second homes and investment properties with the hope of promoting home ownership among residents. The tax applies to the purchase of additional residential properties, including holiday homes and buy-to-let properties and is applicable if the total purchase price of the property exceeds £40,000.

Anyone purchasing a second or subsequent residential property in Scotland may be liable for ADS. This includes individuals, companies, and other entities. It’s important to note that ADS is payable in addition to the standard Land and Buildings Transaction Tax (LBTT). For example, if you already own a home and decide to buy another, you will be required to pay ADS on the new property, regardless of whether it’s an investment or a holiday retreat.

The ADS rate is currently set at 6% of the total purchase price of the property. This rate is applied uniformly, meaning there’s no tiered system as with LBTT. For instance, on a property purchased for £250,000, the ADS would amount to £15,000. As demonstrated, ADS can result in a significant addition to the overall purchase price. As professional estate agents, it is our duty to make purchasers aware of the ADS in order that this tax can be factored in pre-offer.

Bell Ingram Oban recently listed a single portfolio of three island properties, comprising three-bedroom family residence and two self-contained one-bedroom holiday letting cottages, all set within around 19 acres of coastal frontage. Whist the main three-bedroom residence is highly likely to become a family home, the two letting cottages are each subject to the ADS. In this instance, the valuation of the main house is covered by the mortgage valuation within the Home Report, therefore an independent valuation is required to determine the taxable value for each cottage.

The implementation of ADS reflects the Scottish Government’s commitment to improve housing affordability and availability for primary residences by discouraging the acquisition of multiple properties by investors and/or wealthier individuals. The aim is to level the playing field by giving first-time buyers a better chance in a competitive property market. Prospective buyers of second homes or investment properties must carefully consider this additional cost when planning their purchases.

If you are looking for property advice in the Argyll & Bute region, contact our Oban team on 01631 566 122 or email

Our people

Andrew Fuller

Andrew Fuller

Senior Associate
Estate Agency
Tel: 01631 566 122

About: Andrew heads up the Estate Agency team in our Oban office and is focused on ensuring his clients have a first-class experience when they list their property with Bell Ingram. A resident of the Isle of Mull, Andrew is very well known across the West Coast of Scotland and has developed an excellent reputation for marketing prime residential property, including plots, crofts, island homes and lifestyle opportunities. Andrew joined Bell Ingram following almost 15 years managing several high-level private and commercial development projects in the United Arab Emirates. Interests: Residential Estate Agency, Rural Property Sales.

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