In response to the Scottish Government’s consultation on increasing council tax premiums for second and empty homes, Propertymark members in a recent survey said they strongly oppose the proposal. Instead, incentives should be provided to homeowners to make vacant homes more productive and help combat the ever-growing gap in supply and demand.

According to the Scottish Government’s proposals, councils may be given additional powers that would allow them to increase the current council tax premium on homes that have been empty for over 12 months. Currently local authorities are able to charge a premium of 100% council tax. Proposals would also introduce a premium either up to or exceeding 100% council tax for second homes.

Providing incentives for empty homes could help solve the housing crisis

There are many reasons why a property is vacant and the current incentives to rent a property as a holiday let are greater than the additional council tax premium. Providing incentives for empty properties to be let in the private rented sector or to be renovated and sold alongside building new homes, would be more beneficial in helping to solve the housing crisis.

There has been a significant increase in the number of empty and second homes since 2010, with latest figures from the Scottish Government showing that in January 2023 there were 42,865 long-term empty homes in Scotland. As part of the Scottish Government’s Housing to 2040 strategy published in 2021, they aim to build 100,000 affordable homes by 2040 through a variety of means, including examining how empty houses can be turned into homes and how local authorities can maximise their housing supply.

The Scottish Government is also consulting on whether changes should be made to the threshold for when self-catering accommodation would be applicable for non-domestic rates, rather than council tax. Currently, properties rented for 70 days, and available to rent over 140 days, would be classed as small businesses and therefore the property owners would have to pay non-domestic rates rather than council tax. Propertymark has stated that changes to the non-domestic rates should be made by the discretion of local authorities to ensure sufficient supply of long-term housing while balancing the needs of local communities.

Local authorities in Scotland have had powers to charge additional council tax premiums for second homes since 2014. Despite this, the number of empty homes has increased by over 10,000 between 2014 and 2022. While some of this increase can be explained through improvements in data collecting, it is clear an alternative approach is needed, rather than a doubling down on additional council tax.

At a time when Scotland continues to face a housing shortage, it is vitally important that policies implemented can help bring empty homes back into use. This will ease the pressure on housing stock, especially since empty homes can lower land values and make it harder to sell other properties nearby. Through increases in taxation, the Scottish Government is only making it more expensive for homeowners to bring their homes back into use. As an alternative, the Scottish Government should provide greater incentives such as grant funding for people to bring empty properties back into use and give more support to local authorities to help them provide dedicated resources to tackle the issue.

The full consultation response from Propertymark can be read here.