Experts say SNP's policy raises more questions than cash
The SNP-led Scottish government’s latest Budget has put high‑value homes firmly in the crosshairs, with Scotland's own version of the “mansion tax” set to land by April 2028. The move – welcomed by the Green Party – will have significant implications for affluent borrowers, prime and super‑prime lending, and some segments of the buy‑to‑let market.
For brokers operating in Scotland’s higher‑value postcodes, this is no longer an abstract political talking point, but a live planning issue for the coming years.
What exactly has been announced?
Finance Secretary Shona Robison has confirmed plans to introduce two new council tax bands for Scotland’s highest-value homes from April 2028.
Budget papers allocate £5m next year “towards a targeted council tax revaluation of properties worth over £1m, to support the introduction of two new ‘high value property bands’ from 1 April 2028”.
Under the proposals, homes valued between £1m and £2m will fall into a new Band I, while properties above £2m will be placed in Band J. Crucially, these valuations will be updated for affected homes only; all other properties will remain on the long-standing Bands A to H.
The scale of the increase remains unclear. Councils—not Holyrood—will set final rates, offering only a broad indication of where liabilities could land.
Several technical questions are still unanswered, including how often valuations will be revisited and where the final thresholds and multipliers will sit. The government has also acknowledged it cannot yet estimate revenues, noting the policy “will be developed further” before implementation.
The move brings Scotland broadly into line with Westminster’s plans. The UK Government announced a similar levy on homes above £2m in England, adding a further charge to council tax from April 2028.
Robison left LBTT unchanged for main residences. Rates on second homes—via the Additional Dwelling Supplement, which rose last year—are frozen until at least April 2027.
Economists question narrow focus and revenue impact
Mairi Spowage, Director of the Fraser of Allander Institute, struck a sceptical note, telling the BBC there were still serious questions about how the policy would operate in practice and how much revenue it would actually generate.
“What we really want to see in Scotland is a revaluation of the entire property tax base, because we know that over half of homes are currently in the wrong council tax band,” she said. “So it’s disappointing to see this reform targeted only at the very top end of the market.
“Council tax is also a local authority tax, so it’s unclear to what extent this change will raise additional money for the Scottish government itself. I’m not sure how that would work in practice – will it require some kind of negotiation between local government and the Scottish government over who gets the revenue?”
“Another blow to families in affluent areas”
On the ground, broker sentiment reflects a similar mix of concern and pragmatism.
Brian O’Neill of ONOZZI told Mortgage Introducer that the costs of the policy will be felt unevenly.
“This change won’t affect the super‑prime market, but it will certainly be another blow to families in affluent areas, especially following multiple recent tax increases.
“As always, the Scottish Government waits to see what Westminster does, then goes a little further. The £1m threshold takes no account of a family’s mortgage position and setting it lower than England’s £2m limit will impact many households in parts of the country where house prices have risen significantly in recent years.
“We still need to see the proposed increase in full, but the greatest impact will be on properties just over the £1m mark.”
Alan Mackenzie, Director of Your Next Step, warned that the new bands will act as a drag on an already sensitive segment of the market.
“I think the introduction of new council tax bands for £1m+ properties is ultimately unhelpful for sellers in this bracket. While it’s unlikely to stop transactions altogether, any additional ongoing cost will inevitably make buyers more cautious and add another hurdle in an already price‑sensitive part of the market.”
Prime and super‑prime: “running‑cost premium” and cliff‑edge behaviour
Euan Stewart of Perth Mortgage Centre expects the new bands to embed a premium at the higher end of the market.
“The new I and J council tax bands for £1m–£2m and £2m+ homes will add a clear running‑cost premium to Scotland’s prime and super‑prime stock, on top of already chunky LBTT and higher‑rate income tax—so the total cost of ownership narrative becomes harder to ignore for high value buyers.”
The impact, Stewart said, will cluster in well-known pressure zones.
“The obvious pressure points are Edinburgh’s New Town, Morningside/Bruntsfield and the Grange, Glasgow’s West End and pockets of the Southside plus established rural and coastal hotspots in Perthshire, St Andrews and the East Neuk, Deeside, Speyside and parts of Argyll etc. where £1m plus is now relatively common.”
Mackenzie takes a slightly different view on where the real pressure will land, arguing that core city postcodes will remain comparatively robust.
“Prime locations in Edinburgh and Glasgow should remain the most resilient simply because demand is still there,” he said. “The greater impact is likely to be felt on larger rural, coastal and lifestyle properties, which are already taking longer to sell and are more exposed to changes in sentiment.”
Stewart also expects pricing to re-shape sharply around the threshold.
“I’d expect more cliff‑edge behaviour as we approach 2028 – vendors pitching at £995k, buyers pushing harder to keep agreed prices under £1m, and some upsizing decisions being brought forward to beat the new bands. Over time though, genuine super prime buyers are more likely to price this in than walk away altogether.”
“Cumulative drag” and Scotland’s competitiveness
Client discussions suggest that attention is shifting away from the language of “mansion tax” and toward the broader squeeze from multiple rising charges.
“Early conversations are less about the headline label of a mansion tax and more about cumulative drag – e.g., council tax, LBTT, income tax (fiscal drag) and running costs all rising at once,” Stewart noted.
He also flagged a competitive risk if these trends continue, particularly for buyers with choices across the UK.
“Wider concerns and upsides for advisers/lenders: The risk is that Scotland looks incrementally less competitive versus prime markets in the North of England, especially for mobile professionals and retirees who can choose either side of the border. The upside is that advice becomes even more valuable – brokers will be doing more holistic total cost planning.”
