Scottish Government announces tax changes for second and empty homes

Scottish Government announces tax changes for second and empty homes

First Minister Humza Yousaf

Plans to enable councils to raise the amount of council tax paid on empty and second homes will be included in a new Scottish Government consultation to help increase housing availability.

First Minister Humza Yousaf will announce proposals at the Scottish Trades Union Congress today which could give councils powers to charge up to double the full rate of council tax on second homes from April 2024.

The proposed change would bring second homes into line with long-term empty homes from next year. The joint consultation with COSLA will also seek views on further powers to charge more than double 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 spokesperson, Councillor Katie Hagmaan, added: “Local government in Scotland is committed to supporting access for everyone in Scotland to an affordable home.

“That is why we are pleased to be launching this joint consultation, as we work to meet the shared aim of creating the right balance to increase the availability of housing and a taxation system that is fair for the tourism industry.

“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.

“We are pleased to be jointly working with the Scottish Government on this vital area of work and we look forward to considering the responses.”

Commenting on the announcement, Shaheena Din, national project manager at the Scottish Empty Homes Partnership, said: “We are pleased that the Scottish Government is exploring potential new measures to tackle the issue of empty homes, particularly in the context of Scotland’s long-term housing needs.

“Empty homes often come with complex circumstances and it is worth highlighting that there is support on hand for owners who need assistance.

“The Scottish Empty Homes Partnership offers an advice service and most Scottish councils now have empty homes officers who can provide support and assistance.

“As a network, we’ve helped bring more than 8000 empty homes back into use in the past 12 years.”

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.”

David Alexander, CEO of DJ Alexander Scotland Ltd, added: “The announcement today by First Minister Humza Yousaf that he intends to consult with COSLA on a proposal that would enable local authorities to double the full rate of council tax for second homeowners is a clear sign that the Government intends to target second homeowners. A doubling of the full rate of council tax will certainly make many second homeowners think twice about remaining in Scotland and many potential buyers will simply invest elsewhere in the UK.”

“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 concluded: “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, housebuilders, 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.”

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