Scottish Building Safety Levy: technical consultation

6. Support for new residential homes sold on to first-time buyers

The Scottish Government is committed to ensuring Scotland is a country where people can be sure of a warm, affordable home. Our Housing to 2040 strategy includes a key commitment to take action to ensure the housing market operates more fairly across Scotland, providing affordable housing options and choices in all communities. In particular, the Scottish Government recognises that rising living costs, high rents and broader economic pressures have made it difficult for first-time buyers to afford their first housing purchase.

To support first-time buyers, we have relaunched our First Homes Fund - a shared-equity scheme and will be open to applications from first-time buyers in Scotland purchasing either a new build or existing property with a mortgage. The scheme aims to support 10,000 first-time buyers every year and will play a key role within the remit of the new Mores Homes Scotland agency to deliver affordable home ownership.

The scheme complements the existing Low Cost Initiative for First Time Buyers scheme (LIFT) which comprises Open Market Shared Equity (OMSE) and New Supply Shared Equity (NSSE), assisting those who currently do not qualify for LIFT. Taken together, the Scottish Government’s home ownership schemes have supported almost 52,000 households since 2007, spending over £1.7 billion.

The scheme also complements our First-Time Buyer relief (FTBR) for Land and Buildings Transaction Tax (LBTT), which allows eligible first-time buyers to pay no LBTT on the first £175,000 of the property’s purchase price. This increases the nil-rate threshold from the standard £145,000 to £175,000. To end-of-April 2026, over 110,000 home buyers have benefitted from FTBR. The majority of first-time buyers pay no LBTT, and all others benefit from a tax reduction of £600.

As a tax on residential construction, the SBSL is to be paid by developers and therefore first-time buyers (or any other homebuyers) would not be subject to the charge. However, we are interested in exploring how the implementation of the SBSL could be used to support first-time buyers in purchasing new build properties.

The Scottish Government is therefore considering options to enable taxpayers to apply for relief from the SBSL for each completed unit that is sold onto a first-time buyer. For the purposes of exploring this relief, we propose that ‘first-time buyer’ is defined in the same terms as for LBTT FTBR, and that the following conditions are met:

• the property must be a new residential unit;
• the buyer is a first-time buyer, meaning they are a first-time owner of a property and have never previously owned a residential property anywhere in the world;
• the buyer intends to occupy the dwelling as their only or main residence;
• the transaction is not a linked transaction (see exception to this rule in the ‘Linked transaction’ section of Revenue Scotland’s guidance on LBTT FTBR); and
• the transaction is not one to which Additional Dwelling Supplement (“ADS”) applies^[3]

Where a residential property is purchased jointly by two or more buyers, LBTT FTBR is available only if all purchasers are first-time buyers. If any buyer has previously owned a property, the relief does not apply.

As the relief would apply to the taxpayer (most likely the developer) rather than the first-time buyer, any benefit to the buyer would be conditional on the taxpayer (e.g. the developer) ‘passing on’ the benefit, either through a reduced sale price or through an incentivisation to provide more new build stock for first-time buyers. A possible effect of the relief would be to reduce a taxpayer’s liability to the SBSL without any corresponding benefit to the buyer.

It should be noted that any ‘passed-on’ benefit would only affect those first time buyers which choose to purchase a new build home. Additionally, such a relief would not be available to all taxpayers (developers) for the SBSL – BTR and PBSA developments notably do not contain units for onward sale to homeowners, therefore this type of activity would not be eligible. We also recognise that not all for-sale developments will be geared towards first-time buyers and therefore some home builders will be better positioned to receive this relief than others.

A relief to properties sold on to first-time buyers would see less revenue raised through the SBSL for the work of the Cladding Remediation Programme. Any benefits from the introduction of the relief therefore need to be balanced against the impact on funding this critical work.

Administering such a relief may create challenges for both taxpayer and the revenue authority. In order to qualify for the relief, taxpayers will need to know the buyer’s status and provide evidence to support this determination. Such information may not be known until after the levy has been paid, meaning that taxpayers who qualify for the relief may have to pay their liability and then claim it back at a later date. In instances where completion and sale take place weeks or even months apart, the ability for taxpayers to pass on savings from the relief will be limited.

Taxpayers will also be reliant on the accuracy of the information provided by the buyer. As the collection agency, Revenue Scotland will need to verify applications for the relief. Using LBTT FTBR relief data may be able to be cross-checked for applications but it may not capture all instances. Providing incorrect information to Revenue Scotland could also result in penalties being applied.

In light of these challenges, the Scottish Government would welcome views from respondents on the practicalities and effectiveness of a relief which aims to support purchases of new build properties by first-time buyers.

Question 14: what are your views on the introduction of a full or partial relief for taxpayers responsible for completed units that are sold onto first-time buyers?

Question 15: what are your views on the conditions that would have to be met in order to qualify for a first-time buyer relief?

Question 16: what evidence would a taxpayer be able to provide to evidence their sale of a property onto a first-time buyer?

Question 17: if implemented, do you think that such a relief would benefit first-time buyers, for example through proportionately lower house prices or more housing stock?

Question 18: what other mechanisms should the Scottish Government explore to help support first-time buyers?