Council tax on second and empty homes could double

Council tax on second homes could rise to double the normal rate or even higher, with the same charges being levied on long term empty homes, under Scottish Government proposals now out to consultation.

Views are invited on whether councils should have additional powers giving them discretion to levy these higher charges. Ministers want to encourage more residential accommodation to be used as homes for living in and for these to be occupied for more of the time.

It is emphasised that local areas need to decide how to achieve the right balance in the use of housing to meet local needs and support thriving communities. Therefore the paper also seeks views on whether the current non-domestic rates thresholds for self-catering accommodation should change, and whether councils should have discretion to set them.

What count as second or empty homes is also up for discussion, as are the factors councils should take into account when deciding whether to apply council tax premiums and what types of accommodation and what circumstances should be exempt.

The proposed change would bring second homes into line with long-term empty homes from next year. 

Latest figures show that in January 2023 there were 42,865 long-term empty homes in Scotland, on top of the 24,287 second homes classified as at September 2022. The latter figure equates to around 1% of residential accommodation Scotland. In October 2022 there were 18,290 self-catering accommodation units on Scottish valuation rolls for non-domestic rates.

At present there is a default council tax discount of 50% on a property that is not someone's sole or main residence, though councils have power to vary that down to 10% or allow no discount at all. Most councils in fact charge the full rate, apart from seven that allow a 10% discount. In the case of empty homes, there are exemptions where the owner is in long term residential care, hospital or prison, and also certain situations where more than the standard rate can be charged.

The plans will deliver on commitments in the Scottish Government’s Housing to 2040 strategy and the 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.

First Minister Humza Yousaf commented: "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."

COSLA resources spokesperson Councillor Katie Hagmaan added: "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."

Find the consultation here. Responses are due by 11 July 2023.