Agent blasts government over huge second home tax increase

An agent has spoken out about a proposal to allow huge council tax rises on second homes and empty properties.

New Scottish First Minister Humza Yousaf has launched a formal consultation which would 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 consultation will also seek views on further powers to charge more than double rate on both empty and second homes in future years.

Now David Alexander, chief executive of lettings agency DJ Alexander Scotland Ltd, commentes: “The announcement by First Minister Humza Yousaf … 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 six per cent 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 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?”

Currently, a default 50 per cent council tax discount is applied to second and empty homes with councils then able to reduce the discount available. A 100 per cent 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.

The new plans from the Svottish Government are part of a deal between the Scottish National Party and the Scottish Green Party.

Yousaf says: “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.”