MSPs have netted £1.25m in profit from buying second homes in Edinburgh with taxpayers’ money.
Since devolution, 25 MSPs, including two cabinet ministers, have used their expenses to cash in on the capital’s property boom. They use accommodation allowances to fund properties worth up to £300,000 in some of the city’s most desirable areas.
Since 1999 property prices in Edinburgh have risen by more than 100%, making it Britain’s most lucrative housing market outside London.
MSPs are allowed to claim up to £10,000 to pay for accommodation if their constituency is too far from Edinburgh for them to travel. The parliament’s corporate body ruled that MSPs can keep any profit they make on second homes bought with their accommodation allowances.
While the MSPs have done nothing illegal and will only realise the profit when they sell the properties, there are concerns that any money they make on homes should be returned to the public purse.
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The biggest windfall has been made by Fergus and Margaret Ewing, the Nationalist MSPs, whose apartment in Lochend Road has made an estimated £97,000 since it was bought in September 2001. The couple, who previously owned a ground floor flat in Brown Street, claimed £11,144 in accommodation expenses last year.
Jim Wallace, the deputy first minister and leader of the Scottish Liberal Democrats, bought a flat in East London Street in July for £232,000 after making an estimated £64,000 from a property he bought in McDonald Road in February 1999.
Nicol Stephen, the transport minister, has made an estimated £57,000 from a house in Morningside Road which he bought for £193,000 in June 2002.
Murray Tosh, the Tory list MSP for the West of Scotland, has made an estimated £35,000 profit on a £290,000 house which he bought in Holyrood Road last April.
Between them, the 25 MSPs are believed to have made £1.25m — an average of £50,000 profit each.
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Others who have benefited include Hugh Henry, Richard Lochhead, Linda Fabiani and Tavish Scott, who have all bought flats in Lower London Road, making an estimated £53,400, £48,400, £48,000 and £28,000 respectively.
The allowance is intended for MSPs who live in far-flung constituencies and those with poor transport links to Edinburgh.
It can be claimed to cover mortgage repayments, lawyers fees, surveyors fees, council tax bills, television licences, removal costs, building and contents insurance, the provision of utilities, security lighting, alarms and factoring charges.
Dennis Canavan, the former Labour MP and independent MSP for Falkirk West, said: “I think it is understandable that MSPs from the outlying areas receive support with their accommodation expenses in Edinburgh but it is completely unjustifiable to make a capital gain using public money.
“The corporate body should look into this and make changes to close the loophole. There should be a mechanism built in whereby MSPs repay any capital gains to parliament.”
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The Bank of Scotland forecasts property in Scotland to rise by an average of 18% over the next year, which would net another £300,000 for MSPs.
MSPs have repeatedly come under fire for their growing expenses bill. Last year MSPs claimed £7.5m in support allowances on top of their £49,000-a-year salaries.
The Bank of Scotland said: “House prices in Edinburgh have never experienced boom and bust and as such Edinburgh property is an excellent investment. We predict that house prices in Edinburgh will continue to rise.”