Tax changes behind dip in number of landlords in Aberdeen, but first-time buyers are in luck

Property sales in Aberdeen fell in the last quarter of 2017.

Tax changes have been blamed for driving landlords out of the property market, especially in Aberdeen.

But the changes will offer a “great opportunity” for first-time buyers in the city, according to a property firm.

New research, led by estate and letting agent Aberdein Considine, claims that almost two thirds of homeowners have been put off investing in a second home due to the new 3% levy introduced by the Scottish Government.

The firm says the additional tax – together with the staged withdrawal of relief on mortgage payments by Westminster – is starving the sector of new landlords and pushing many to offload stock.

Its quarterly Property Monitor report reveals sales fell in 17 of Scotland’s 32 local authority areas during the last quarter of 2017, including Aberdeen but not Aberdeenshire.

Senior property partner Bob Fraser said: “I would say that it’s particularly a problem in Aberdeen but is also relevant all over Scotland.

“It’s a problem in Aberdeen because it’s adversely affected by the ongoing oil and gas downturn.

“The changes are putting even more properties onto the market where demand for property has been reduced because of the oil market.

“The additional tax has made it harder or less attractive for buyers to have a second property for holiday or as a buy to let.”

Aberdein Considine’s Union Street branch in Aberdeen listed 87 new properties for sale between January 1 and March 1. Of those, 20 (23%) were landlords looking to sell buy-to-let property.

Although the tax changes have been blamed for tough conditions for homeowners looking to sell, they are providing a great market for first-time buyers, according to the property firm.

Mr Fraser added: “It has created a great opportunity for first time buyers. But it will have an adverse effect on people selling and an adverse effect further down the line on leased stock.”

Mr Fraser also said if there are fewer landlords and fewer rental properties, average rents could be driven up.

Alongside this, the UK Government has started the withdrawal of a relief which allows higher-rate taxpayers to offset their buy-to-let mortgage interest payments against their tax bills.