A plan by the Scottish Government to create a level playing field on tax relief for property funds could stimulate a wave of investment into Scotland.
The Scottish Government is consulting on tax changes to Land and Buildings Transaction Tax (LBTT).
More consistent tax reliefs treatment from Holyrood ministers will enable investors such as pension funds or wealth managers to allocate capital more simply and smoothly between England and Scotland.
Reserved Investor Funds (RIFs), for example, are a new type of fund specifically aimed at unlocking more investment into affordable housing, regeneration, sustainability initiatives and other socially essential projects.
The fund structure has been eligible for launch since 19 March 2025 and several investment groups are planning RIF launches. Two other UK-domiciled funds enjoy tax reliefs when they hold underlying property in England.
David Melhuish, director at the Scottish Property Federation, said: “The Scottish Government’s consultation is a welcome development for the new RIF, and other UK based fund vehicles – CoACS and PAIF – which hold property.
“As the rules currently stand, Scottish property would be subject to an unfavourable tax treatment if they were pooled into one of these vehicles which creates both disparity and discouragement for investment.
“We need parity in tax treatment to ensure that our UK-based fund vehicles can pool assets from across the UK – particularly in the context of the UK Government’s wider pension reform agenda and drive to consolidate existing pension schemes into mega funds, along with the need to generate economic growth across Scotland”.
Paul Richards, CEO at the Association of Real Estate Funds, said: “The property industry is making good progress towards accomplishing more social and sustainable investments.
“But they could travel at a quicker pace, and invest greater sums, with more harmonisation in the way they are taxed in England and Scotland. This consultation is therefore very welcome.”
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