Economic problems for Highland in 2026 and what might solutions look like - Listing A Few North Businesses On The Market

31st December 2025

In 2026, the Highland region of Scotland finds itself at a unique economic crossroads. While it faces "once-in-a-generation" opportunities in renewable energy and green technology, it is simultaneously battling structural crises in housing, demographics, and public funding.

Here is an overview of the main economic problems for Highland in 2026 and the potential solutions being implemented or proposed.

1. The "Housing Bottleneck"
The Problem: There is a chronic shortage of affordable housing. Paradoxically, the boom in renewable energy projects has increased demand for workers, but there is nowhere for them to live. High levels of second-home ownership and short-term lets continue to price out locals and essential workers.

Potential Solutions:

Fiscal Measures: As of 2026, the Highland Council is actively using powers to increase Council Tax on second homes (up to 100% premium) and long-term empty properties to fund local housing.

The Social Value Charter: Strategic partnerships, like the one with SSEN Transmission, involve developers committing to build permanent housing (e.g., a target of 500 homes) as part of their infrastructure projects.

New Land Agencies: Proposals include a Scottish Land Agency with powers to buy land strategically for affordable housing, bypassing market-driven price hikes.

2. Infrastructure & Connectivity Gaps
The Problem: The "Highland Premium"—the extra cost of delivering services and goods in a vast, rural area—is being exacerbated by aging transport links (A9/A96) and a digital divide. While fiber rollout continues, many remote areas still lack the high-speed connectivity needed for modern "anywhere" work.

Potential Solutions:

Digital Transformation: Investment in "Community PODs" (Points of Delivery) in towns like Thurso and Dingwall to centralize services and provide digital hubs for remote workers.

Public Transport Innovation: The council has begun running its own in-house bus services to cut costs and provide more reliable routes where private providers have failed.

Grid Upgrades: Massive investment in transmission (part of the £100bn pipeline) is not just for export; it is being leveraged to ensure more resilient local energy supplies and potential "community benefit" funds.

3. The "Shrinking Workforce" (Depopulation)
The Problem: An aging population and the "brain drain" of young people to the Central Belt or south of the border. By 2026, the region needs approximately 16,000 workers to meet the construction peak of green energy projects, but the local labor pool is insufficient.

Potential Solutions:

Green Skills Transition: The University of the Highlands and Islands (UHI) is pivoting its 2025-2030 strategy toward "tertiary research," focusing heavily on hydrogen, space, and marine biotech to create high-value careers that keep young talent in the north.

Talent Attraction Schemes: Proactive "visa" support and marketing campaigns (like the Highlands and Islands Workforce Summit initiatives) to attract skilled workers from the rest of the UK and abroad.

Community Wealth Building: Ensuring that the profits from massive wind and hydro projects are reinvested locally to improve "quality of life" factors that make the region attractive to families.

4. Local Government Fiscal Pressure
The Problem: The Highland Council is forecasting a budget gap of over £16 million for the 2026/27 financial year. Inflation in construction and social care costs, combined with a funding model tied to population (which is declining in some areas), has created a "scissors effect" of rising costs and falling revenue.

Potential Solutions:

The "Entrepreneurial Council" Model: The council is moving away from being just a service provider to a revenue generator (e.g., the Old Man of Storr visitor attraction now generates significant profit for reinvestment).

Highland Investment Plan: A 20-year, £2 billion plan funded by ring-fencing 2% of Council Tax specifically for schools and roads, reducing the reliance on unpredictable yearly grants.

Tourism Levies: Implementation of "Visitor Levies" (the "Tourist Tax") is a major 2026 discussion point to ensure the millions of visitors contribute directly to the infrastructure they use.

In Caithness and Sutherland, the tourism industry in 2026 is facing a "profitability paradox." While the North Coast 500 (NC500) has brought record visitor numbers, the hospitality sector is struggling with a wave of business sales and a lack of interested buyers.

Here is an analysis of why these hotels and bars are sitting on the market and what the tourism landscape looks like for the region.

1. The "Exit Wave" of Independent Owners
A high number of iconic venues in towns like Wick, Thurso, Tongue, and Helmsdale are currently for sale (e.g., the Ben Loyal Hotel and The Holborn Hotel).

The "Burnout" Factor: Many of these are family-run "lifestyle" businesses. After years of post-pandemic recovery followed immediately by a cost-of-living crisis, many owners are opting for retirement or career changes.

Why Buyers are Hesitant: Traditional buyers (couples or families moving to the Highlands) are finding it harder to secure commercial lending. Interest rates remain high, and banks are cautious about the hospitality sector's "thin margins."

2. The "Perfect Storm" of Operating Costs
The primary reason businesses aren't finding buyers is the daunting overheads associated with running a remote Highland hotel in 2026:

Business Rates Spike: As of April 2026, many Highland hospitality businesses are facing steep increases in rateable values—some as high as 40% for countryside hotels. With the potential end of small business relief schemes, the tax bill alone is deterring investors.

The Staffing & Housing Deadlock: You cannot run a hotel without staff, but there is nowhere for them to live. Buyers are wary of taking on businesses where they must also become property developers just to house their workforce.

The "Highland Premium" on Supplies: Inflation in food, drink, and energy costs hits Caithness and Sutherland harder due to delivery surcharges. A pint of beer or a pub meal in a remote village now often costs more than in Inverness, testing the limits of what tourists are willing to pay.

3. The Shift in Tourism Behavior
While the NC500 remains a global draw, the way people travel is changing, affecting traditional bars and hotels:

The Rise of Self-Catering & Campervans: A significant portion of the "NC500 crowd" now travels in motorhomes or stays in Airbnb-style pods. They often bring their own food or use supermarkets, meaning they aren't spending as much in local hotels and bars as previous generations of "hotel-hopping" tourists.

The "Flow Country" Opportunity: On a positive note, the Flow Country's UNESCO World Heritage status (granted in 2024) is beginning to attract a new type of "eco-tourist" in 2026. These visitors tend to stay longer and seek authentic, high-end experiences, but many existing "standard" hotels require significant capital investment to meet their expectations.

4. What Solutions Are Emerging?
To prevent a permanent "hollowing out" of these communities, several initiatives are in play:

Community Buyouts: We are seeing more interest in community-owned pubs and hubs (similar to the success of the Oldshoremore area), where the goal is social resilience rather than pure commercial profit.

The Visitor Levy ("Tourist Tax"): Discussions in 2026 are focused on how funds raised from a potential levy could be ring-fenced specifically for tourism infrastructure (toilets, waste, and parking) to take the pressure off local businesses.

Repurposing for Workers: Some hotels that fail to sell as tourism businesses are being looked at as worker accommodation for the massive renewable energy and transmission projects (like the HVDC link in Spittal), providing a "guaranteed" income that tourism cannot always offer.

The sector is not failing due to a lack of tourists, but due to a fiscal environment where the cost of "keeping the lights on" in a large, old building often exceeds the profit generated by the visitors. Until business rates are reformed or worker housing is solved, these "for sale" signs are likely to remain.

As of late 2025 and moving into 2026, the market in Caithness and Sutherland is seeing an unusually high volume of established hospitality and retail businesses for sale. This "exit wave" is largely driven by a combination of retirement-age owners and the intense operational pressures discussed previously.

List of some key businesses currently on the market.

Hotels & Inns

Many of these are "anchor" businesses for their respective villages on the NC500 route.

Hotels & Strategic Hospitality
Mackays Hotel (Wick): £1,200,000. An award-winning 30-bedroom hotel on the "world's shortest street."

Ben Loyal Hotel (Tongue): £955,000. A historic 3-star hotel with a self-catering complex on the NC500.

Borgie Lodge Hotel (Tongue): £775,000. A secluded country lodge hotel set in a river glen.

North Coast Touring Park (Thurso): £725,000. A major NC500 destination with an Inn, glamping village, and touring facilities.

Stags Head Hotel (Golspie): £549,000. A 5-bedroom hotel with a public bar, restaurant, and ballroom.

Wickers World Cafe & B&B (Wick): £510,000. A popular harbor-front cafe with 4 letting rooms and owners' accommodation.

Holborn Hotel (Thurso): £475,000. A 7-bedroom hotel including the well-known Red Pepper restaurant.

Strathy Inn (Strathy): £435,000. A traditional NC500 inn with a bar, restaurant, and development potential.

Queens Hotel (Wick): £425,000. An 8-bedroom hotel with a public bar and dining area.

Nethercliffe Hotel (Wick): £420,000. A substantial Georgian hotel with letting rooms and a bar.

The Sheiling B&B (Melvich): £395,000. A successful 6-bath B&B/guest house on the north coast.

Belgrave Arms (Helmsdale): £395,000. A coastal village hotel with traditional bar and rooms.

Pentland Lodge House (Thurso): £620,000. A high-end 8-room guest house in central Thurso.

Dunnet Bay Escapes B and B :Offers over £695,000.

Bars & Restaurants
Crown Bar (Wick): £205,000. A long-established traditional public bar on the High Street.

La Mirage (Helmsdale): Price on Application. A famous 40-cover themed restaurant and takeaway.

Devitas (Wick): £125,000. A well-established and profitable Italian restaurant.

Mountain Dew Bar, Wick : Offers Over £95,000.

Thurso Seafront Cafe (Thurso): £125,000. An iconic building on the seafront previously trading as a cafe.

Keiss Public House (Keiss): £250,000. A village pub including two self-contained apartments.

Retail & Commercial Services
W&D Ross Hardware & Paint Spectrum (Thurso): £565,000. Two linked retail businesses with a strong local customer base.

Birons IronMonger
Bridge Stret
Wick
Asking Price: £225,000

Miller House Offices (Wick): £475,000. A large 2-storey office headquarters with development potential.

Newsbeat Newsagents (Thurso): Price on Application. A central retail unit with a takeaway food/ice cream license.

Fishing Tackle Specialist (Wick): £99,000. A prime retail unit with potential for residential conversion.

Hillside Camping Pods (Auckengill): £365,000. A lifestyle business featuring modern pods on a 4-acre site.

The Trentham Hotel (Dornoch)
Current Status: For Sale (Significant Price Reduction).

Guide Price: Offers over £349,000 (Reduced from higher previous valuations).

Location: Positioned directly on the A9 just north of Dornoch, making it a prime "staging post" for NC500 travelers.

The Building: A traditional 19th-century property with 6 letting bedrooms, a 70-cover restaurant, and a cozy public bar with an open fire.

Potential: The sale includes outbuildings with planning potential for conversion into guest units or staff housing—a major selling point given the current Highland housing crisis.

Why it's a "Deal": It is being sold as a retirement sale (same owners since 1990). The lower price reflects the fact that it is currently trading at a "quieter" level, offering a "blank canvas" for a new operator.

The Ardgay Hotel / Highland Hotel (Bonar Bridge/Ardgay)
Current Status: For Sale (Price Reduced).

Guide Price: £320,000.

Location: Situated in Bonar Bridge (less than a mile from Ardgay station), overlooking the Kyle of Sutherland. It serves as a gateway to the West Highlands.

The Building: A well-appointed hotel with 5 ensuite letting bedrooms, a residents' lounge, a dining room, and a traditional public bar.

The "Worker Strategy": One of the unique selling points being marketed for this hotel in 2026 is its proximity to upcoming major construction and renewable energy projects. The listing highlights the potential for "guaranteed" income from housing contractors, rather than just relying on seasonal tourists.

Owner's Perks: Includes a separate 2-bedroom owner's flat, which is a significant asset given the local property market.

A Revamp Underway in Wick
Former M&Co
The "Active Travel" Revamp (2025-2026)
The timing for this building is critical because of the Wick Street Design Project.

Construction Kick-off: Major work by local contractor GMR Henderson started in late October 2025 and is continuing through 2026.

The Impact: The area immediately outside the former Mackays M&Co is being transformed with new Caithness stone paving, seating, and artwork. While the shop is currently empty, the "curb appeal" of the site is at an all-time high. While many still call it "Mackays," the brand was actually founded in Paisley in 1834 and only became M&Co in 2005. Its closure in Wick marked the end of a 70-year presence of that specific business model in the town. Previously it was Shearers.