Claire Monaghan

This is according to RSM UK’s Real Estate 360 survey, which recorded 35% of businesses saying that additional tax restrictions will be a key barrier to investment, jumping 12% on the previous year. Business rates and political instability also rank highly, at 33% and 31% respectively.

Nearly a third (31%) think capital gains tax and stamp taxes should be reformed to increase investment, with fewer businesses expecting Scotland to see regional growth in residential property (9%), down from 14% the previous year. However, commercial property growth is expected to edge up slightly to 13% this year in Scotland, up from 12% the previous year.

Claire Monaghan, partner and head of real estate and construction at RSM UK in Scotland, commented: “We know the industry sees additional tax restrictions as a key barrier to investment and is bracing for incoming UK and Scottish budget tax hikes, which are driving uncertainty amongst Scottish real estate businesses.

“Nearly a third agreed that capital gains tax and stamp duty taxes should be reformed to increase liquidity in the market, although it’s unlikely we’ll see any significant tax changes in this week’s Spring Statement.

“Increased tax rates in both the UK and Scottish budgets have heightened taxpayer anxiety and raised concerns about future tax rises. Enthusiasm in Scotland also continues to be dampened by the Renters Reform Bill.”

Ms Monaghan continued: “It’s therefore crucial that the government acknowledges the challenges for real estate and construction businesses and provides clarity on future support and investment, to ensure the industry can achieve the targets set within the current parliament.

“We’ve already seen the loosening of planning restrictions, but this needs to be backed up by property tax reform to make home ownership more accessible. Investors also value stability and are more likely to commit to long-term investments when they have confidence in the tax environment.”