Whilst it may be approaching 250 years since the famous words above were first uttered, little has changed in terms of their relevancy.  As a practice we see it as an important part of our ongoing relationship with clients to try to give impartial, balanced, apolitical insight into the workings of the property market and the impact of domestic political and fiscal policies upon it.  We recognise of course that at a time of geo-political tensions and the shifting tectonic plates of our own and Europe’s trans-Atlantic relationships, nothing exists in a vacuum and that domestic politics and economies are to some degree influenced by the bigger global picture but what happens here in terms of Government policy has the greatest impact. 

So with apologies for the somewhat serious nature of this month’s lead article we thought it would be useful to take a look at the effect of both recent and imminent tax and fiscal policy changes and what these could mean for the local property market.

New analysis by the Fraser of Allander Institution reveals that Scottish households are set to pay an extra £952 on average in tax from April 2025, as the Scottish Government implements comprehensive tax reforms that will raise nearly £3.2bn for the Scottish Treasury.  The research concludes that the wealthiest households in Scotland with total assets worth more than £2 million will experience an income reduction of £2,350 on average, but that even the least affluent families face a £710 hit to their finances.

Council Tax Increase in Fife

Fife Council has approved an 8.2% rise in council tax for the 2025/26 fiscal year, aiming to address a budget shortfall exceeding £5 million and to fund essential services. These rises are amongst the third largest in Scotland. The additional revenue is intended to support nearly £10 million in health and social care investments and allocate over £9 million for road maintenance across the region, including areas like Dunfermline and West Fife. For a Band D property, this increase translates to an annual rise of £113.58, elevating the total from £1,385.18 in 2024/25 to £1,498.76 in 2025/26. For those spreading payments over 12 months, this equates to an extra £9.47 per month.

Whilst most will not welcome these increases if spent wisely a West Fife which is better served by better roads, schools and other services will be seen as an even better placer to live and work.  That in turn can increase demand for homes in the area underpinning Dunfermline’s property market.

Land and Buildings Transaction Tax (LBTT) Adjustments

At the end of 2024 the Scottish Government announced changes to LBTT (“stamp duty”) notably increasing the Additional Dwelling Supplement (ADS) from 6% to 8%.  This of course only affects individuals purchasing additional residential properties, such as buy-to-let (BTL) investments or second homes.  A potential downside to this however is that some BTL investors may be discouraged by the tax hike mean fewer such purchases and fewer homes for rent resulting in demand exceeding existing supply and driving up further the cost of renting.  The standard residential LBTT rates and bands remain unchanged, and first-time buyer relief continues to be available which has to be welcomed.  First time buyer relief which sees no LBTT payable below £175,000 and the fact that typical first-time buyers locally tend to earn less than £29,000 (see below) will we think see the one and two bed market remain strong.   Given that first time buyers/sellers are the life blood of the market and the essential first domino that needs to topple for upstream transactions to follow the comparatively benign tax treatment for this sector has to be welcomed.

Income Tax Band Modifications

In the 2025/26 Scottish Budget, adjustments to income tax bands were introduced:

• Starter Rate Band: Increased by 22.6%, now covering income from £12,571 to £15,397, taxed at 19%.
• Basic Rate Band: Expanded by 6.6%, now spanning £15,398 to £27,491, taxed at 20%.
• Higher, advanced, and top rate bands remain unchanged. These adjustments aim to ensure that over half of Scottish taxpayers pay less income tax than their counterparts in the rest of the UK although those earning over approximately £29,000 per annum do pay more.

Impact on Dunfermline and West Fife Residents

There is no doubt that residents in Dunfermline and the broader West Fife area will feel the cumulative effect of these tax changes. The council tax hike will directly increase household expenses especially at a time when most other costs such as food and energy costs are still rising.  Adjustments to LBTT may influence decisions regarding property investments and second home purchases although we do not foresee this having a significant impact on either prices or the volume of transactions. The income tax band modifications could offer some relief to lower and lower- middle income earners but may not fully offset the increased financial burden imposed by the other tax changes.  For middle earners earning over £29,000 per annum being those who drive the bulk of the local property market, there could be a little hesitancy when it comes to thoughts of upsizing.  We suggest that what we would term discretionary moves – the nice but non-essential extra bedroom and larger kitchen – may be fewer in number meaning that typical three and four bed family homes may see slower price growth and marginally reduced demand. 

If you would like to discuss any aspect of the property market, the content of this article and how tax changes might impact a planned move we’d love to hear from you.  Email michael@maloco.co.uk or keiran@maloco.co.uk