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The Scottish Government has included a provision in the Coronavirus (Scotland) (No.2) Act 2020 to extend the amount of time available to buyers to reclaim the Additional Dwelling Supplement (ADS) they might have paid when buying their new home.

The unintended consequences of ADS

Whilst the ADS was introduced as a property tax on buy-to-let properties and those wishing to purchase a second home, it had some unintended consequences. One consequence meant that if you buy your new home before you manage to sell your existing home, you’ll have to pay ADS. This is currently 4% of the full purchase price – and it is in addition to any Land & Buildings Transaction Tax that’s already due to be paid. As you might imagine, this can be very expensive for buyers.

Recognising this anomaly in the ADS regulations, provisions were introduced to allow buyers to reclaim the ADS paid on their new home once their existing property has been sold. There is, however, a time limit within which the ADS can be reclaimed and until the recent legislation came into force, that time limit was 18 months from the date on which they bought their new home.

In order to take into account the difficulties being encountered in the property market caused by the coronavirus lockdown, the Scottish Government included a provision in the new legislation to extend the timescale within which the ADS can be reclaimed from 18 months to 36 months – an additional 18 months from the date of purchase of your new home. This extension of time will only apply to those buyers who purchased their new main residence between 24 September 2018 and 24 March 2020. The reasoning behind the dates is that it covers buyers who may have paid ADS but been unable to sell their previous main residence but were still within the 18 month time limit to dispose of it as at 25 March 2020.

We hope, with the re-opening of the property market just round the corner, that those buyers who have been caught out by being unable to sell when the housing market closed down, will now be able to re-launch the marketing of their property and secure a sale.

If you need any help or advice in relation to your purchase or sale, please don’t hesitate to get in touch with us. We’re here and ready to help. Call us now on 0141 227 2207 or or use the contact link below for further information or to arrange an appointment.

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