Council Tax On Second Homes In Scotland In Line For Doubling

15th January 2023

Pressure on the Scottish Government to allow councils to double the the council tax on second homes is rising.

The Poverty and Inequality Commission made its recommendations in a report in august 2022.

The report covered a range of issues and on the council tax said -

Council Tax on second homes
Councils currently have discretion to grant a council tax discount of between 10% and 50% for second homes. This compares to empty homes, where, if a property has been unoccupied for more than 12 months, a council has the option to charge double the normal rate of council tax.

As of September 2021, there were 23,890 second homes in Scotland. For 2021-22, 25 out of the 32 local authorities had removed the council tax discount on second homes, six retained the 10% discount and in one local authority a second home discount of 10% would only apply for a period of 12 months from the date the property was last occupied as a sole or main residence, and then be removed.

Owners of second homes in Scotland will benefit from the £400 energy bill discount for their second home as well as for their main residence. This means those who own two homes will get twice as much support from the government as those who own one home. Second-home owners are on average wealthier (in terms of both total wealth, and all categories of wealth - property, financial, pension, and physical wealth) and also have higher incomes compared to home-owners without second homes and households without any property wealth. Through the energy bill discount and council tax discounts wealthier people are in effect being supported by tax payers to own a second home.

Some members of our Experts by Experience Panel thought that second home owners should pay more council tax.
"People who own second homes, they should pay more council tax. There should be a premium. Say if it's a second home, and it's lying empty half the year, there should be a premium on that. Right now they can get an exemption, but they should be charging people more."
"Anyone with a second house, third house, I don't see how they should get away without paying, especially if you're getting an income from it."

The Scottish Government should amend the law to allow councils to charge up to double the normal rate of council tax on second homes, in the same way they can charge for empty homes. In the short term this would allow councils to recover the additional £400 received by second home owners (raising in the region of £9.5
million), and in the medium term the ability to increase council tax would be a tool that councils could use to help manage the impacts of second home ownership in their areas.

In England, there are also plans to allow councils to charge a council tax premium of up to 100% on second homes. The implementation of such a policy in Scotland would need legislative change.

Facts and Figures on Second homes in Scotland

Other pressures for second home owners letting as holiday lets include Registration fees in Scotland that has been delayed but still coming. See https://www.visitscotland.org/supporting-your-business/advice/short-term-lets-legislation

Highland Council Advice on Letting

Wales
The Welsh Government has changed the law to allow councils to charge up to three times the normal council taxon second homes.
In Wales, councils can charge an additional amount of council tax (a ‘premium') of up to 100% of the normal council tax on second homes. This will rise to a 300% maximum from April 2023.

England
Changes to council tax in England are being driven by the levelling up agenda. The proposals are to allow councils to double the council tax. Some English councils are already gearing up to apply double council tax. For example Whitby and Scarborough