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Empowering Councils to Raise Taxes on Second Homes

Lack of affordable housing is forcing families and young people to leave their island and rural communities. It is creating a crisis in workforce availability for those with jobs and those obtaining work locally unable to find places to live.

Stromness Bank of Scotland with for sale notice

During the Covid lockdowns in 2020 the number of houses used for second homes and short term holiday lets in Orkney turned some places into ghost communities. This had a further impact on retail outlets – there was simply too few people there to shop. Some of these businesses have never recovered.

In addition to this situation – there are many properties in Orkney which are simply empty which might be able to be brought back into use.

Total Number of Second Homes and Long Term Empty Properties

Total Number of Second Homes and Long Term Empty Properties

The Scottish Government has now put out for consultation a proposal that local councils could raise much needed additional revenue with changes to Council Tax on second and empty homes.

In Edinburgh the local council has in place a Short Term Let Control area:

The designation came into effect on 5th September 2022. 

The use of an entire dwelling that is not a principal home, as a short-term let will be a material change of use requiring planning permission, in accordance with Section 26B of the Town and Country Planning (Scotland) Act 1997 and The Town and Country Planning (Short-Term Let Control Areas) (Scotland) Regulations 2021. 

It does not apply to home sharing or home letting.

Building new affordable homes is really important as these not only provide new housing stock but provide employment and boost the local economy. But land is expensive and on that land are many properties which whilst good for tourism are not providing homes for local people.

For the purpose of the consultation the following are the definitions used for Council Tax purposes:

  • a “second home” is a dwelling which is no one’s sole or main residence but which is furnished and lived in for at least 25 days during the chargeable 12 month period
  • an “unoccupied dwelling” is a dwelling, which is no one’s sole or main residence but which is not used as a second home.

For Short Term lets : – “the whole or part of accommodation provided to one or more guests on a commercial basis that does not become the main residence of the guest/s”

It will depend on what kind of Short Term accommodation it is for the level of Council Tax applied.

It will be no surprise that second homes are most popular in islands and rural communities.

Council AreaShare of second homes
Argyll & Bute6.2%
Na h-Eileanan Siar5.9%
Orkney Islands4.8%
North Ayrshire2.2%
Dumfries & Galloway1.8%
Scottish Borders1.7%
Perth & Kinross1.6%
Shetland Islands1.5%
Second homes as a percentage of adjusted chargeable dwellings by councils over national average of 1% (2022)

For Council Tax purposes councils can: alter the level of discount, to provide a discount of between 50% and 10% or offer no discount.

In Orkney  there is a 10% Council Tax discount which lasts for up to 12 months from the date the property was last occupied as someone’s sole or main residence. If the property is not lived in for at least 25 days in any 12 month period, the property will instead be treated as an empty property and subject to the empty property surcharge of 100%. There are a small number of empty properties and second homes that are entitled to receive a discount of 50%. This is for people who live in one island but because of their employment are required to maintain a second home in another island as constant ferry travel is not feasible. OIC

Most local Councils in Scotland apply the full rate of Council Tax to Second Homes.

Empty Properties and Second Homes in Orkney 2013 and 2022

Orkney Islands Council20132022
long term empty properties186211
long term empty properties 12 months+153
second homes503563
unoccupied exemptions from Council Tax422427
Empty Properties and Second Homes in Orkney 2013 and 2022

The Scottish Government wishes to give local councils more power over what rate of council tax on second homes they can charge by:

  • introducing additional powers that enable a premium of up to 100%
  • introducing additional powers that enable a premium of greater than 100% to be applied to both second (and long-term empty) homes

It would be up to local councillors if they wished to use these increased powers which would bring in additional income to their communities.

For homes which are classified as ‘Empty’ , that is ‘not lived in at all or is lived in for less than 25 days in the council tax charging period’ councils could be given powers to either  keep the current premium capped at 100% or have the discretionary powers to increase this beyond 100%.

It is a possibility, according to the Scottish Government, that changes such as these might encourage increases in council tax for second and long-term empty homes and that second home owners may choose to let their home out as self-catering accommodation for part of the year. This would increase the number of holiday accommodations available.

The consultation closes on 11th of July. To share your views:

Please respond to this consultation using the Scottish Government’s consultation hub, Citizen Space, at http://consult.gov.scot

You can save and return to your responses while the consultation is still open. Please ensure that consultation responses are submitted before the closing date of 11 July 2023.

If you are unable to respond using our consultation hub, please complete the Respondent Information Form and send to:Second Homes/ Empty Homes/ NDR Consultation
Scottish Government
More Homes Division
Bothwell House
Hamilton Business Park
Caird Park

Responses may also be sent to secondandemptyhomes@gov.scot

a view up Alfred Street in Stromness empty of people

Fiona Grahame

3 replies »

  1. I was pleased to read in ‘The Orcadian’ that Number 1 King Street in Kirkwall is to be knocked down, the site examined for possible archaeology, then two houses are to be built on the site.

    I’ve passed that many times and wondered why it was standing there falling to pieces, while folk need a place to live. This is a very positive approach to providing accommodation, rather than building on green-field sites.

    I genuinely don’t understand the problems with the plans to build on what was the Scarth Centre….


    I don’t understand a lot of things that OIC do – or don’t do!

    And, while we’re on the subject of buildings standing empty…


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