Gregor Duthie, legal director at Gilson Gray, said: “The Scottish Budget announcement has once again wrong-footed the property investment market overnight. The rate of Additional Dwelling Supplement (ADS) has been increased from 6% to 8% with immediate effect. Whilst the headlines refer to additional charges on ‘second homeowners’, the scope of ADS is much wider and affects small scale buy-to-let landlords, short-term letting owners, and any dwelling being purchased into a company name.

“The increase in the tax being levied on these purchases has a significant impact on investor cashflow, and with changes being brought into effect from today, buyers are left with little chance to review their model.

“Any transactions which were subject to a concluded contract prior to the budget announcement will be unaffected and will benefit from paying ADS at the previous 6% rate. However, for any purchases which are currently in progress, the significant 2% overnight raise will have a detrimental effect and will no doubt be a concern for many investors.”