Holyrood’s Finance and Public Administration Committee says it is “unconvinced” that the Scottish Government has fully considered the implications of the Bill on the nation’s ‘housing emergency’.

The committee has decided, therefore, to make no recommendation on the general principles of the bill – a first time for this committee – and says it hopes the government will respond positively to its findings.

The committee is also calling on the government to carry out market ‘sensitivity analysis’ prior to deciding levy rates and reliefs, and to monitor the effect of the new tax on the housing sector. 

Finance and Public Administration Committee convener Kenneth Gibson said: “Our committee understands the Scottish Government’s intent behind this Bill, but we believe the introduction of the levy carries significant risk. We have concerns regarding its potential impact on the housing market, and on the delivery of houses in areas where the viability of building sites is already challenging.

“We are unconvinced that the government has fully considered the implications for its self-declared housing emergency when designing the policy approach for this levy. We also believe the policy design has been focused on the arbitrary figure that the levy could raise, and not sufficiently focused on developing a good, well-structured levy that is sustainable.

“On the basis of the evidence received, our committee makes no recommendation on the general principles of the bill. We trust that the Scottish Government will respond positively to our recommendations to inform further discussion of the general principles during the Stage 1 debate in the chamber in January 2026.”

Calling for regular reports on the housing market impact, Mr Gibson said: “Our committee recommends that the reporting requirements in the bill be strengthened, so that the government is required to report every three years on how the levy is working. That report should include an assessment of how the levy is impacting the Scottish housing market in practice.

“Our committee does not consider the levy to be fully reflective of the sensitivities of the housing market in Scotland. We therefore recommend the government undertakes a sensitivity analysis, to assess in more detail, the impact of the levy on the housing market - in particular on rural sites and on SME developers.

“The analysis should be published in time to inform the government’s decisions in setting levy rates and, where applicable, any reliefs, through secondary legislation.”

Other findings and recommendations include:

• there is a strong case for exempting remote rural areas from the scope of the levy. While recognising the challenges in developing an appropriate definition for remote rural developments, this should not be a barrier to introducing this important exemption.
• the bill should be amended to include a sunset clause to provide an opportunity to robustly review after 15 years how the levy is operating and for the Scottish Parliament to then decide whether the law should remain in place. This, we consider, should provide much-needed reassurance to the industry that the levy is not intended to become a permanent tax on housebuilding.
• the committee is concerned about the potential for the levy to contribute to the loss of historic buildings in Scotland. It recommends the government considers a targeted broadening of this exemption for conversions, which will help to protect historic buildings that may otherwise remain abandoned. 

Minister Ivan McKee announced in November that the introduction of the levy rates will be pushed back by more than a year to April 2028.