Legislation that would levy a supplement on the purchase of additional residential properties has been given the backing of MSPs on the Scottish Parliament’s finance committee.

The Land and Buildings Transactions Tax (Amendment) (Scotland) Bill introduces a supplement on purchases of additional residential properties in Scotland (such as buy-to-let properties and second homes) over £40,000. As drafted, the bill would apply across the board to all relevant purchases above the threshold.

In agreeing to the general principles of the bill however, the committee has emphasised the need to balance the interests of first time buyers with the needs of those who rent their homes and with the interests of house builders and investors, to protect the supply of new homes. The committee has therefore called for the introduction of a relief on bulk purchases of six properties or more.

The committee also noted concerns about the potential impact on the private rental sector through a reduction in the number of homes available for rent and higher rental costs. The report recommends that it is essential that the Scottish Government closely monitors the impact of the supplement on rent levels especially in areas where rents are already high.

The report also highlights support for a number other reliefs including for registered social landlords and local authorities, and for student accommodation.

Kenneth Gibson MSP, convener of the finance committee, said: “Whilst the committee is supportive of the Bill’s aim to support first time buyers entry into the property market, there are a number of areas that we wish to see addressed as the Bill progresses through Parliament.

“The committee heard concerns, for instance, about the impact on people who rent, whether through choice or necessity. The Royal Institute of Chartered Surveyors has suggested that the supplement could lead to a rise in rents as additional costs are passed on to tenants. We feel that the support given to first time buyers must not be at the expense of those people who rent their homes.”

The committee’s report also highlights concerns that have been raised by a number of stakeholders about “the limited time that has been made available by the Scottish Government for parliamentary scrutiny of this bill”. The report’s conclusion acknowledges this and says that it is “essential that the impact of this Bill is closely monitored and that a comprehensive review is carried out once sufficient data is available.”

Mr Gibson added: “Many organisations have commented on the truncated timetable that this legislation has been subject to. I agree that it is far from ideal, however this is a problem that I would expect to occur with greater frequency as the Parliament assumes more powers and the Scottish Government responds to decisions made by the UK Chancellor that impact on Scotland. There is a need for Parliament and Government to develop a process that allows for transparent consultation and scrutiny whilst recognising that it may occasionally be necessary for swift decisions to be taken on tax matters.”