Second home owners face double council tax
Humza Yousaf: striking a balance (pic: Terry Murden)
Second home owners face paying double council tax under moves by the Scottish Government to tackle the shortage of housing.
A consultation on giving councils the extra powers over second homes will be announced by First Minister Humza Yousaf today.
Mr Yousaf will announce the proposal at the Scottish Trades Union Congress. It would bring second homes into line with long-term empty homes from next year.
The joint consultation with local authorities umbrella group COSLA will also seek views on further powers to charge more than double the rate on both empty and second homes in future years.
Latest figures show that in January 2023 there were 42,865 long-term empty homes in Scotland.
The consultation will also ask for views on whether there should be changes to the definition of when a property offering self-catered accommodation becomes liable for non-domestic rates.
The plans will deliver on commitments in the Scottish Government’s Housing to 2040 strategy and Bute House Agreement with the Scottish Green Party to enable councils to prioritise homes for living in and manage the impact of second or long-term empty homes.
Ahead of the consultation opening, the First Minister said: “We want everyone in Scotland to have an affordable home that meets their needs and this work to improve the availability of sustainable long-term housing opportunities is a core part of that.
“By recognising the important role councils have in considering local needs, these proposals aim to strike a balance between good housing supply and helping communities to thrive and benefit from tourism.
“I encourage anyone who is interested to respond to the consultation as we try to prioritise homes for living in, seeking a fair contribution to local services from everyone and recognising the benefits to local economies from self-catering accommodation and second homes.
“All responses will be carefully considered before legislation is introduced to the Scottish Parliament.”
COSLA resources spokeswoman Councillor Katie Hagmaan said: “Local government in Scotland is committed to supporting access for everyone in Scotland to an affordable home..
“We also welcome the greater fiscal empowerment for councils to reflect local circumstances this would introduce. Any additional funding created by these changes under consultation will enable councils to invest in local needs and support sustainable communities.”
Scottish Labour housing spokesperson Mark Griffin said: “While it is welcome to see that this SNP government is willing to listen to Labour ideas, it is a shame that all they can bring themselves to do is a pale imitation of Scottish Labour’s plans.
“Under the SNP, Scotland has developed a housing crisis that has priced thousands out of the market and left many more in precarious residential situations. Tinkering around the edges won’t do.
“Humza Yousaf must learn from Labour and implement a proper council tax accelerator on empty homes to fund a £1 home policy.”
Research released for the British Property Foundation (BPF) found up to £2.5 billion of potential accommodation developments may not be delivered because of the rent control policy.
Four of 14 large investors involved in the buy-to-rent sector in the UK described the Scottish market as “uninvestable” under current conditions given the effective freezing of rents and pause on evictions. A further five rated it as “unattractive” while the remainder were neutral.
David Alexander, CEO of lettings agent DJ Alexander Scotland, said: “With the purchase of second homes already subject to a 6% higher rate of property tax north of the border charging double the rate of council tax will ensure that fewer second homeowners will come to or remain in Scotland. Someone buying a £350,000 second home in Scotland already pays £29,350 in Land and Buildings Transaction Tax (LBTT) compared to £15,500 in the rest of the UK.”
“On the issue of charging for a higher rate of tax on an empty home this ignores the many legitimate reasons why properties may not be occupied. People may be in a care home, some may be working abroad, or there could be a delay in processing the estate of a deceased individual, resulting in properties being left vacant for much more than 12 months.
“Are the owners of these properties to be punished for being elderly, for working outside Scotland, or for delays in a legal process?”
David Alexander:’ ‘it will barely scratch the surface’
He added: “There are only 42,865 long term empty homes in Scotland so if this policy is aimed at addressing housing shortages it will barely scratch the surface.
“Also, given that the social housing waiting list is in the hundreds of thousands, this seems to barely address the issue. But it is a gesture and a lot easier than implementing a serious house building programme for the next decade.
“Until government engages with all parts of the housing sector – social and private rental markets, build-to-rent, house builders, and property investors – I fear we will continue to see more policies aimed at a headline than actually resolving the serious issues which housing faces in Scotland.”
The consultation opens on 17 April on the Scottish Government’s consultation page and is expected to run until 11 July.
Currently, a default 50% council tax discount is applied to second and empty homes with councils then able to reduce the discount available.
A 100% premium (double the full rate) can be applied to homes that have been empty for more than 12 months. At the moment, a property is considered self-catered accommodation and therefore liable for non-domestic rates if it is let for a total of 70 nights and is available to let for 140 nights in a financial year.