The Scottish property market is witnessing a significant shift with the recent increase in the Additional Dwelling Supplement (ADS) rate from 6% to 8%. This change presents new challenges for property investors but also highlights an important tax-saving opportunity: portfolio transactions involving six or more properties, which qualify for 100% ADS relief.
If you’re an investor or portfolio owner, understanding this change and its implications is crucial. In this article, we explain ADS, how it has evolved, and why The Portfolio Brokers are uniquely positioned to help you navigate this new landscape.
What Is ADS and Why Does It Matter?
The Additional Dwelling Supplement (ADS) is a tax applied in Scotland to the purchase of additional residential properties, including buy-to-let investments and second homes. It is charged on top of the Land and Buildings Transaction Tax (LBTT) and has been increasing steadily since its introduction:
- 2016: Introduced at 3%
- 2019: Increased to 4%
- 2020: Raised to 6%
- December 2024: Now 8%
This incremental rise has significantly impacted property investors, particularly those purchasing multiple properties.
Example: The Financial Impact of the ADS Increase
- For a single property priced at £200,000:
- 6% ADS: £12,000
- 8% ADS: £16,000
- For 6 properties individually purchased at £200,000 each:
- 6% ADS: £72,000
- 8% ADS: £96,000
The numbers are clear: ADS can add tens of thousands of pounds to your transaction costs, making efficient tax planning more critical than ever.
How to Avoid ADS: The Portfolio Solution
ADS Relief for Portfolio Transactions
The good news for investors is that portfolio transactions involving six or more properties are completely exempt from ADS. For the above example, the purchase of 6 properties as a portfolio would provide an initial saving of £96,000!.
This exemption allows buyers to grow their portfolios without incurring these significant additional costs. The transaction is classed as Non-Residential and the LBTT is also calculated using the Non-Residential rates and bands which you can find out more about here.
Key Benefits of Portfolio Transactions:
- 100% ADS Relief: Save tens of thousands on taxes.
- Streamlined Process: One transaction instead of multiple.
- Efficient Investment Growth: Expand portfolios strategically.
Interested in portfolio opportunities that qualify for ADS relief? Register and browse our listings now.
What This Means for Buyers and Sellers
For Buyers
The ADS increase will prompt many investors to rethink their strategies. More than ever, portfolio transactions now offer a clear tax advantage, making them the most cost-effective way to expand your property holdings.
Why Work with The Portfolio Brokers?
We specialise in identifying portfolio opportunities that meet your investment goals while ensuring compliance with tax regulations. Our team provides:
- Access to exclusive off-market portfolio listings.
- Detailed property analysis to guide your decisions.
- Comprehensive support throughout the purchase process.
Ready to save thousands on your next property purchase? Schedule a consultation with our team today.
For Sellers
This tax change creates an ideal opportunity for portfolio owners. With increasing demand for portfolio transactions, now is the time to market your properties strategically to attract motivated buyers.
How We Help Sellers:
- Expert guidance on pricing and positioning your portfolio.
- Access to a network of serious investors.
- Marketing strategies tailored to maximize your portfolio’s value.
Are you curious about your portfolio’s value? Request a free assessment now.
Why Choose The Portfolio Brokers?
As Scotland’s only specialist portfolio estate agency, we understand the complexities of buying and selling property portfolios. Our expertise ensures you can navigate the evolving property market confidently and efficiently.
Our Services Include:
- Off-market portfolio sales to minimise disruption.
- Comprehensive property reports and analysis.
- Expert advice tailored to your unique needs.
Learn more about our services and how we can help you succeed. Contact us today.
Take Action Today
The 8% ADS rate is now in effect, and the property market is changing rapidly. Whether you’re an investor looking to save on taxes or a portfolio owner ready to capitalise on increased demand, The Portfolio Brokers is your trusted partner.
📧 Email: in**@*****************rs.com
📞 Phone: 0131 210 0304
🌐 Website: www.theportfoliobrokers.com
