Council Tax Premium on Second Homes
North Ayrshire Council · 24 June 2026
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NORTH AYRSHIRE COUNCIL 24 June 2026 North Ayrshire Council Title: 100% Council Tax Premium on Second Homes – Monitoring Report Purpose: To note details of the policy impact following one year of implementation of the 100% Council Tax premium for Second Homes within North Ayrshire applied from 1 April 2025. Recommendation: That Council notes the level of movement across property classifications during 2025/26 and considers this within the context of the original planning assumptions made, and the supporting data received. 1. Executive Summary 1.1 On the 12 February 2025 North Ayrshire Council approved the revisions to the policy to implement a 100% premium Council Tax charge on second homes from 1 April 2025; and that 10% of any additional income received under this policy is ringfenced to support investment in affordable housing. It was noted that monitoring on the potential impacts of behavioural changes is required on an ongoing basis. 1.2 Following the first full year of implementation the overall number of second homes across North Ayrshire has reduced by 110 (7.5%) from 1,476 to 1,366. The original planning assumption around potential behavioural changes projected a reduction of up to 296 second homes (20%) from 1,476 to 1,180. Related to this movement, during this same period the number of self-catering units in North Ayrshire has increased by a net 42 properties, noting that 40 new self-catering units were previously classified as second homes. This indicates a classification shift from properties occupied for at least 25 days (second homes) to properties available to let for at least 140 days per year and let at least 70 days per year. This could promote more occupancy across North Ayrshire communities. In terms of empty and long-term empty properties, the statistics for the year indicate an overall improved position when compared to the period before the policy change, therefore no evidence of any negative impacts at this time. 1.3 Through the process of monitoring it is important to understand any negative impacts which have arisen directly from the policy implementation. It is recognised from the previous consultation process and from recent engagement, that views around the policy continue to be expressed from stakeholder groups. What is less clear however, is the availability of any material evidence to date that supports such negative impacts. Whilst the position will continue to be monitored, any potential policy impacts
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should continue to be considered within the context of the range of micro and macro- economic factors that impact citizens, communities and businesses. 1.4 Revenue from the new policy totalled £2.218m in 2025/26. This was more than previously anticipated and due to a lower-than-expected level of behavioural shift in property classification. The in-year collection rate was 96.5% which was higher than anticipated. It is recognised that this source of recurring revenue will help address the financial challenges facing the Council and help protect vital Council services. During the year a total of £1.275m revenue was generated from second homes and long-term empty properties (with c£0.2m additional income generated from the 100% premium on second homes in 25/26) to support investment in affordable housing as part of the Council’s Strategic Housing Investment Plan. 1.5 For wider context, every local authority across Scotland has implemented this policy. Following a recent amendment to legislation under the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amended Regulations 2026, the pre-existing statutory upper limit on the level of variation (premium) to Council tax, has now been removed. This change allows Councils to consider varying this rate further based on their own local circumstances. 2. Background 2.1 On 14 February 2024 North Ayrshire Council noted the additional powers available to local authorities under the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2023, which allowed for the variation of the Council Tax charge for second homes from the current 100% charge to include a premium of up to a further 100% of the applicable Council Tax charge. However, the adoption of these powers was deferred pending public consultation on the proposals, including with our island communities. 2.2 On the 12 February 2025 North Ayrshire Council approved the revisions to the policy to implement a 100% premium Council Tax charge on second homes from 1 April 2025; and that 10% of any additional income received under this policy is ringfenced to support investment in affordable housing. It was noted that monitoring on the potential impacts of behavioural changes is required on an ongoing basis. 2.3 The policy context around the application of the Council tax premium for second homes is to make the council tax system work as an incentive to prioritise homes for living in on a more permanent basis and increasing the level of home occupancy. It was anticipated that the adoption of the powers under these regulations would result in behavioural change across second homeowners, leading to a better balance between second homes and homes occupied on a more permanently basis by encouraging second homeowners to use their accommodation differently, benefitting local communities, increasing supply in the private rented sector and through switching to holiday letting that could have a net economic benefit in terms of greater levels of occupancy.
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Movement In Property Classification 2025/26 – Impact of Behavioural Change 2.4 The baseline analysis presented to Council on 12 February 2025 indicated a total of 1,476 second homes within North Ayrshire, with the majority concentrated on Arran (Ward 4) and Cumbrae (within Ward 1): Band Ward 1 Ward 2 Ward 3 Ward 4 Ward 5 Ward 6 Ward 7 Ward 8 Ward 9 Total Cumbrae (Included within Ward 1) A 334 9 7 57 14 2 1 0 2 426 272 B 119 4 2 61 8 2 3 2 3 204 72 C 113 5 1 106 3 1 1 0 4 234 61 D 83 3 1 124 6 1 2 1 1 222 22 E 76 5 8 147 5 3 3 1 1 249 21 F 42 1 1 65 0 0 0 0 0 109 1 G 16 1 0 12 0 0 0 1 0 30 1 H 1 1 0 0 0 0 0 0 0 2 0 Total 784 29 20 572 36 9 10 5 11 1,476 450 2.5 The current profile for second homes at April 2026 is included in the undernoted table: Band Ward 1 Ward 2 Ward 3 Ward 4 Ward 5 Ward 6 Ward 7 Ward 8 Ward 9 Total Cumbrae (Included within Ward 1) A 319 10 5 59 15 0 1 0 1 410 259 B 103 2 2 71 6 0 3 2 7 196 62 C 98 6 0 99 5 0 0 0 2 210 50 D 65 3 3 121 5 1 2 1 1 202 18 E 63 3 8 138 3 2 2 0 0 219 20 F 39 0 1 67 0 1 1 0 0 109 1 G 10 1 0 8 0 0 0 0 0 19 0 H 1 0 0 0 0 0 0 0 0 1 0 Total 698 25 19 563 34 4 9 3 11 1366 410 Movement Analysis 2.6 The current number of second homes reflects a reduction of 110 (7.5%) from the baseline number. In terms of breakdown, the reduction includes 61 from the mainland (13.4% of mainland second homes), 9 in Arran (1.6% of Arran Second Homes) and 40 in Cumbrae (8.9% of Cumbrae second Homes). In overall terms the level of anticipated behavioural change has been lower than anticipated, with very little
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movement in Arran and greater levels of movement across the mainland and Cumbrae. 2.7 One of the anticipated areas of behavioural shift is through the change to the number of self-catering units across North Ayrshire linked to this policy change. For context, the report to Council on the 12 February 2025 noted the policy could influence behavioural changes across current second home ownership to support greater levels of occupancy through more holiday let self-catering unit properties. This would be through a modal shift from second home occupancy of at least 25 days per annum to the property being available for rent for 140 days per year and let for at least 70 days per year. The report also noted that the extent of any behavioural shift would likely depend on the economic circumstances of the second homeowner. In terms of current data, over the period of 2025/26 there were a total of 141 properties added to the valuation roll as self-catering units and a total of 99 properties removed from the valuation roll as self-catering units. This reflects a net movement (increase) in self- catering units of 42 properties since the application of the Council tax premium. It should also be noted that from the 141 properties added as self-catering units during 2025/26, a total of 40 of these properties were previously classified as second homes. 2.8 It should also be noted however; the Ayrshire Valuation Joint Board continues to review the evidence that supports the classification of self-catering units. In cases where the assessor is not satisfied with the evidence submitted, this has led to properties being returned to the Council tax register. 2.9 To add wider context, the other main reasons for movement that impact on the overall number of second homes include the property becoming the primary residence of the owner (supported by appropriate evidence), the property being rented to a tenant, the property being sold or the property becoming empty and unfurnished. Due to the variable level of movement across each category and complexity, it is not possible to provide any further breakdown across these categories at this time, however, further detailed analysis of movements is currently being progressed. 2.10 An area of potential negative impact identified from the 100% council tax premium applied to second homes; is the effect this could have on the number empty and unfurnished properties and long-term empty properties across North Ayrshire. The consequence being considered is that the policy could influence a behavioural shift that leads to more properties being empty and empty for longer periods of time, when compared to the period before the policy was implemented. The undernoted table provides data over two time periods in respect of the number of properties across North Ayrshire empty and unfurnished and long-term empty furnished properties (for less than 12 months) at the end of March 2025 compared to the position at the end of April 2026; Classification Status At March 2025 Status At April 2026 Delta Empty & Unfurnished properties (less than 6 months)
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Mainland 431 366 -65 Arran 28 14 -14 Cumbrae 9 12 3 Total 468 392 -76 Empty & Unfurnished properties (between 6-12 months) Mainland 170 197 27 Arran 20 17 -3 Cumbrae 5 7 2 Total 195 221 26 Long Term Empty properties (furnished properties empty for up to 12 months) Mainland 184 146 -38 Arran 13 9 -4 Cumbrae 5 6 1 Total 202 161 -41 Overall Total 865 774 -91 2.11 Analysis of empty and unfurnished properties and long-term empty furnished properties from the Council tax register indicates an overall reduction of 91 properties across the comparable timeframe from the 3 main categories. The profile of the properties is weighted heavily in the mainland, with much lower numbers of empty properties across Arran and Cumbrae. In summary, this current data appears to indicate that there has been no direct evidence at this time of negative impacts arising from the policy of applying a 100% premium on Council tax for second homes, on the prevalence of empty homes across the area. In fact, the position has improved across the mainland and Arran, with Cumbrae reflecting a very marginal level of negative change. In terms of properties that are empty for more than 1 year, which could be subject to the property levy, the timings are such that it is not yet appropriate to present statistical data in relation to the Long-Term Empty Property Levy, as this measure applies only to properties that have been unoccupied for a continuous period of 12 months or more. Given that the Second Home Premium was introduced on 1
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April 2025, only a 12-month period has recently elapsed, and sufficient data is not yet available for reporting. Analysis of Property Supply and Property Sales Prices (Island Communities) 2.12 For the purpose of providing meaningful representative analysis of property supply and property sales price movements over the last year, Rightmove sales data provides comprehensive coverage of the UK housing market. Due to the high concentration of second homes on North Ayrshire island communities and in view of the previous Island Communities Impact Assessments undertaken, sales and supply data for both islands has been extracted and compared across the periods before the application of the 100% Council tax premium for second homes (April 2024 to February 2025), and after (April 2025 to February 2026). Data for Arran and Cumbrae is provided in the undernoted tables: Arran Cumbrae 2.13 In Arran the number of listings over the period has reduced by 10 with the average sales price for all listing reduced by £10k over the period. On further examination of
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the data, the main reason for reduction in average sales price is due to the change in proportions of property type. Analysis of property type is included within appendix 1 of the report. In 24/25, 65 of the 128 listed properties (51%) reflected higher value detached properties, whereas only 50 of the 118 properties (42%) in 25/26 were detached properties. In terms of supply of properties available on the market during the period, Arran has seen a reduction in the number of listed properties over the last year from this data set i.e. 128 in 2024/25 to 118 in 2025/26. 2.14 In Cumbrae, the number of total property listings has increased by 13 (from 52 to 65) over the period, reflecting a potentially higher level of supply on the market, with the average sales price falling by almost £36k over the period. In terms of property type, the 24/25 data included 6 detached properties (12%) and 41 flatted properties (79%), with the 25/26 data only listing 1 detached property (2%) and 58 flatted properties (89%). Unfortunately, the bedroom composition of the properties is not available to draw further comparisons across years. In general terms the data reflects a higher proportion of flatted properties being listed in 25/26 when compared to 24/25, however, in the absence of bedroom composition analysis it is difficult to ascertain if property prices in Cumbrae have been negatively impacted through any supply exceeding current demand. Local Housing Strategy 2.15 The North Ayrshire Local Housing Strategy 2023–2028 was approved by Cabinet on 13 June 2023 and sets out the strategic priorities for tackling housing issues in the area during the five-year period. A progress report is produced annually with the last report presented to Cabinet on 30 September 2025. The strategy sets out priorities for more affordable, energy efficient homes to address housing need across communities. 2.16 The Strategic Housing Investment Plan (SHIP) 2026–2031 aims to secure investment for the delivery of a total of 1,038 properties – 741 by the Council and 297 by its Registered Social Landlord (RSL) partners - providing sustainable, affordable, accessible, and high-quality homes which will contribute to the wider regeneration aims for the area. 2.17 In terms of housing supply, this is delivered through a range of vehicles, including the Council as a main house builder, RSL’s, private sector developers and buy backs. For further context, the Scottish Government supports acquisitions to bring existing homes into use more quickly, increase affordable supply, and make efficient use of public investment. This is reflected in the North Ayrshire Housing Acquisition Strategy which was recently presented to Cabinet on 2 June 2026. 2.18 At 1 June 2026 there were a total of 6,160 applications on the North Ayrshire Housing Register. Most applications sit within the mainland. 401 applicants have selected Arran as an area of preference, with 126 of those applicants having a current Arran postcode. 231 applicants have selected Millport (within Cumbrae) as an area of preference, with 47 of those applicants having a current Cumbrae post code. In addressing this demand, an objective of the North Ayrshire Housing Acquisition Strategy is to continue to assess any opportunities for acquisition that arise in suitable housing supply influenced through the impact of the application of the 100% premium in Council tax for second homes, across the mainland and island communities.
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2.19 For further policy context, the Affordable Housing Account remains an integral source of funding to support the delivery of affordable housing projects by the Council and RSL partners. This funding is generated from second homes and long-term empty properties across North Ayrshire. In 2025/26, the fund increased from £2.617m to £3.345m at 31 March 2026. The increase of £0.728m is represented by income from second homes and long-term empty properties in the year of £1.275m (with c£0.2m additional income generated from the 100% premium on second homes in 25/26) and drawdowns of £0.547m in the year to support investment in affordable housing as part of the Council’s SHIP. 2.20 The investment from the Affordable Housing Account has supported and will continue support affordable housing investment across the mainland and Islands of North Ayrshire. From an islands context the investment has supported Council and RSL developments including Copeland Crescent, Millport (12 units), St Beya Gardens, Millport (18 units), Brathwic Terrace, Arran (34 units) and Benlister, Arran (56 units). Financial Performance 2025/26 2.21 The report presented to Council on the 12 February 2025 included an estimate of the potential financial impact from the application of a 100% premium to second homes from 1st April 2025. This included additional gross income of up to £2.092m per annum, however, this would likely be offset by an initial Bad Debt Provision equivalent to 10% reflecting potential difficulties in collecting the increased charges. The variable impact of behavioural changes through the period was also estimated and included a 10% reduction in second homes resulting from the sale or private rent of second homes, or the property becoming the main residence of the owner, and a further 10% of second homeowners removing their properties from the Council Tax register and registering their homes as self-catering unit businesses under Non-Domestic Rates regulations. The financial effect of these modelling assumptions projected that net additional income from the policy would be around £1.306m per annum. From the policy, a 10% contribution to the affordable housing fund from the 100% Council tax premium was estimated to generate £0.131m, leaving net additional Council tax revenue of £1.175m to help address the significant cost pressures facing the Council and protect vital services. This financial estimate was incorporated into the Council’s Medium-term financial plan, approved at North Ayrshire Council on 26 February, 2025. 2.22 At 31 March 2026, following the first year of application of the 100% premium on Council tax for second homes, the actual level of additional income received in the 2025/26 financial year totalled £2.218m. The breakdown across each locality is presented in the undernoted table. The increased level of income when compared to original planning assumptions is due to a number of reasons; 1) the number of second homes fluctuated from the original base level back in February 2025, generating more accounts earlier in the year 2) The collection rate was higher than anticipated i.e. 96.5% of the accounts were paid in 2025/26 against an original planning assumption of 90%, and 3) the level of overall behavioural shift in second homes is lower than anticipated. The original planning assumptions indicated a prudent assumption of up to a 20% reduction in the number of second homes which equated to 296 second homes. From the planning assumption this would leave 1,180 second homes across North Ayrshire, however the current number is 1,366 i.e. the actual level of overall reduction is 110 second homes, equating to a 7.5% reduction. It is recognised there has been a variable level of reduction across the mainland, Arran and Cumbrae as outlined earlier in the report.
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Locality 2nd Home Additional Income 1 - North Coast * (Including Cumbrae) £1,048,964 2 - Garnock Valley £31,101 3 - Ardrossan £29,323 4 - Arran £1,016,617 5 - Saltcoats & Stevenston £47,579 6 - Kilwinning £10,249 7 - Irvine West £18,009 8 - Irvine East £4,368 9 - Irvine South £12,122 TOTAL £2,218,332 As noted in section 2.19 of the report, 10% of this additional revenue (c£0.2m) from the application of the Council tax premium will support investment in affordable homes as part of the Local Housing Strategy and SHIP. Consultation and Engagement 2.23 During 2024, North Ayrshire Council delivered an extensive programme of engagement and Consultation with communities, seeking feedback on a wide range of budget areas. The programme ran from 10 October 2024 to 25 November 2024 and was in the form of an on-line survey as part of the Council’s Budget Engagement programme, as well as a more targeted on-line survey which residents and businesses, particularly those most directly affected, were asked to contribute to. Feedback was also gathered from engagement groups. 2.24 Full details of the consultation responses were presented to Council on 12 February 2025. A total of 507 responses were received in respect of the on-line survey, with many respondents being from the island communities i.e. 247 (49%) responses from Arran and 155 (31%) from North Coast and Cumbrae residents. 2.25 The feedback received was understandably mixed. In respect of the survey a total of 191 (38%) respondents favoured the premium levy being applied and 299 (59%) did not favour the levy. In terms of context, a total of 209 (41%) respondents identified as second homeowners. 2.26 Due to the high proportion of second homes on Arran and Cumbrae, the consultation process was supported by Island Communities Impact Assessments undertaken for both Islands, with the details presented to Council on 12 February 2025. 2.27 It is recognised from the previous consultation process and from more recent engagement, that views around the policy continue to be expressed from stakeholder
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groups. This has been evident through a range of correspondence and Freedom of Information requests since the date of policy implementation. In the case of Cumbrae Community Council, they conducted a recent survey which includes 346 respondents, 213 of whom are second homeowners (62%). For reasons of transparency, the details of the survey are included Appendix 2 for information. 2.28 With regards to any potential wider economic impacts of this policy, from engagement with the Council’s Business Development team and with a particular focus on island communities, analysis of business growth metrics across the last couple of years indicate a relatively stable position across areas including business start-ups, employment / job creation and job safeguarding metrics. It is also recognised that one of the challenges in measuring the economic impact of a policy, is how any direct impacts of the policy are determined from the range of macro and micro economic factors that businesses and communities are faced with. These include but are not limited to areas like the ferry service, the weather, business operating costs, cost of living (including energy, food and fuel costs), labour market availability and tourism preferences. 2.29 The Council will continue to engage with North Ayrshire communities through the annual community engagement and Consultation programme. This will likely commence from early November 2026. This is recognised as a key component of the Council’s annual budget setting process, providing citizens and community groups with a platform to express their views across a range of Council services and policies. Conclusion 2.30`The purpose of the report is to provide an analysis and supporting evidence of any impacts following one year since the implementation of the 100% premium on council tax for second homes. The approach adopted and reflected in this report is to consider across a range of areas the position before the policy was adopted compared to the position after one year and where possible to offer any supporting evidence or intelligence around the movements. 2.31 In terms of the number of second homes, there has been a reduction of 110 (7.5%) from the original baseline number. The reduction includes 61 from the mainland (13.4% of mainland second homes), 9 in Arran (1.6% of Arran Second Homes) and 40 in Cumbrae (8.9% of Cumbrae second Homes). In overall terms the level of anticipated behavioural change has been lower than anticipated, with very little movement in Arran and greater levels of movement across the mainland and Cumbrae. During the same period there was a net increase in the number of self- catering units of 42 properties. From an analysis of new self-catering units added during the year a total of 40 properties were previously classified as a second home. In terms of insights, although there have been movements across and within property classifications, the data shows a level of behavioural shift from second home status to holiday lets. This could promote a greater level of home occupancy when you consider the threshold of a second home is at least 25 days per annum compared to the property being available for let for 140 days per year and actually let for at least 70 days per year. 2.32 A potential negative impact from the policy is the effect this could have on the number empty and unfurnished properties and long-term empty properties across North
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Ayrshire. Data analysed over the last year actually reflects an overall positive shift, especially the mainland and Arran and very minor shifts in Cumbrae. There is therefore no initial evidence to suggest that the policy is leading to more properties being empty and for longer periods of time. This position will continue to be monitored. 2.33 Sample analysis of Rightmove property supply and property sales price movements data for the Islands over the last year indicates that the level of housing supply available on the property market for Arran has reduced and Cumbrae has increased. In Cumbrae the increase appears to be mostly represented by an increase in the availability of flatted properties. It is difficult to draw any firm conclusions at this time on average house price movements, this being mainly due to variable composition of property types as reflected in appendix 1. This is an area that will continue to be monitored. 2.34 Housing need across the North Ayrshire mainland and both islands will continue to be addressed in accordance with the Local Housing Strategy (including the Housing Acquisition Strategy) and the SHIP. Opportunities for acquisition that arise in suitable housing supply influenced through the impact of the application of the 100% premium in Council tax for second homes will continue to be assessed. The Affordable Housing Account was credited with £1.275m income from second homes and long-term empty properties in 2025/26 (with c£0.2m additional income generated from the 100% premium on second homes in 25/26) to support investment in affordable housing. 2.35 In terms of revenue generated from the policy, this has exceeded original planning assumptions. This is due to lower than previously anticipated levels of behavioural shift in property classification and higher than anticipated in-year collection rates. This revenue will help address the significant financial challenges facing the Council and help protect vital Council services. 2.36 Finally, for wider context, every local authority across Scotland has implemented this policy. Following a recent amendment to legislation under the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amended Regulations 2026, the pre-existing statutory upper limit on the level of variation (premium) to Council tax, has now been removed. This change allows Councils to consider varying this rate further based on their own local circumstances. 3. Proposals 3.1 It is proposed that Council agrees to: Note the level of movement across property classifications during 2025/26 and considers this within the context of the original planning assumptions made, and the supporting data received. 4. Implications/Socio-economic Duty Financial 4.1 At 31 March 2026, following the first year of application of the 100% premium on Council tax for second homes, the actual level of additional income received in the 2025/26 financial year totalled £2.218m. This exceeded original planning assumptions
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and will help address the financial challenges identified within the Medium-Term Financial Plan. Human Resources 4.2 None. Legal 4.3 The Council has exercised its powers under the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2023. More recently through the Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2026 the pre-existing statutory upper limit on the level of variation (premium) to Council tax, has now been removed. This change allows Councils to consider varying this rate further based on their own local circumstances. Equality/Socio-economic 4.4 The exercising of the powers under the regulations does not have any negative impacts on service users, employees, protected groups or the wider community. Climate Change and Carbon Environmental and Sustainability 4.5 None. Key Priorities 4.6 This report directly supports the Council Plan 2023 to 2028 and is aligned to the Local Housing Strategy as well as supporting investment in the SHIP through the Affordable Housing Account. The revenue generated from the policy helps the Council’s financial sustainability. Community Wealth Building 4.7 No direct Community Wealth Building impacts within this report however a Community Wealth Building approach is embedded with the Council’s Local Housing Strategy. Islands Communities Impact Assessment (ICIA) 4.8 Islands Communities Impact Assessments were completed for Arran and Cumbrae and presented to Council for approval on 12 February 2025 as part of the considerations for the original policy approval in respect of the application of a 100% Council tax premium for Second Homes. On 8 October 2025 Cabinet considered a Review of the decision relating to the Island Communities Impact assessment undertaken for Cumbrae. The outcome of which was that the Island Community Impact Assessment appended to the 12 February 2025 Council report was sufficient, and to receive a future report on the outcomes of the policy one year after implementation to understand the consequences. This report aims to address that requirement.
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United Nations Rights of the Child (UNCRC) 4.9 None. Consumer Duty 4.10 None. 5. Consultation 5.1 During 2024, North Ayrshire Council undertook an extensive programme of engagement and Consultation with communities. The programme ran from 10 October 2024 to 25 November 2024 and was in the form of an on-line surveys as part of the Council’s Budget Engagement programme. Full details of the consultation responses were presented to Council on 12 February 2025. A total of 507 responses were received in respect of the targeted on-line survey, with many respondents being from the island communities i.e. 247 (49%) responses from Arran and 155 (31%) from North Coast and Cumbrae residents. 5.2 Due to the high proportion of second homes on Arran and Cumbrae, the consultation process was supported by Island Communities Impact Assessments undertaken for both Islands, with the details presented to Council on 12 February 2025. . Mark Boyd Head of Service (Finance) For further information please contact Mark Boyd, Head of Service (Finance), on 01294 324551. Background Papers Long-Term Financial Outlook 2024/25 to 2033/34 and Medium-Term Financial Outlook 2024/25 to 2026/27 – Council 13 December 2023 Council Tax on Second Homes from 2024/25 – Council 14 February 2024 Application of 100% Council tax premium for second Homes – Council 12 February 2025 Medium Term Financial Outlook and Approach 2026/27 to 2028/29 – Council 5 November 2025
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Appendix 1 – Rightmove Property listings and sale prices across property classifications – 2024/25 and 2025/26 *Unknown refers to properties where the type of property classification is not known from the data available
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Cumbrae Second Homes Council Tax Premium Community Impact Assessment Report Cumbrae Community Council May 2026 1. Executive summary A survey was undertaken by Cumbrae Community Council (CCC) in April 2026 to assess the real-world impacts of the 100% council tax premium on second homes. The survey was created following the decision by North Ayrshire Council to limit its own monitoring to movement in property status. 346 respondents provided strong evidence that the policy is having significant unintended social and economic consequences, with limited confidence that its stated objectives are being achieved. The policy is already influencing behaviour, particularly in reduced spending, weakened community cohesion, and reconsideration of long-term engagement with the island. • 89% of respondents rated the impact of the policy as negative. • 57% believed it will result in fewer new permanent residents. • Only 12% agreed it will free up homes for working families. • 83% of second homeowners have reduced their spending on the island. • The total negative impact on the island’s economy is likely to be more than £450,000. The island has a total economic output of just £12.9 million. 2. Background CCC challenged the introduction of the 100% premium on second homes council tax on the grounds that the Island Community Impact Assessment (ICIA) prepared by North Ayrshire Council (NAC) was inadequate. The ICIA identified a number of significant impacts that were likely on Cumbrae, but it failed to suggest mitigations for those impacts as required by the Islands Act. An NAC Cabinet meeting on 8 October 2025 rejected the challenge. This decision was called in by NAC’s Audit and Scrutiny Committee, but the scheduled meeting of that Committee was then cancelled without satisfactory explanation. The NAC Cabinet committed to preparing a report to be brought to Council in June 2026 as part of an “ongoing monitoring process”, allowing review of the impact of the policy on Cumbrae. But in a letter from Mark Boyd, NAC Head of Finance to Irene Campbell MP, dated 10 February 2026 it was revealed that the extent of that monitoring would be limited: Appendix 2
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“The monitoring process will initially focus on the level of movement in property status from the baseline data recorded before the implementation of the new policy. This will include the number of second homes across North Ayrshire (including Cumbrae), self- catering units and long-term empty properties. If elected members request any wider economic impact assessment this would be considered, however, an appropriate funding source would require to be identified to support this work. It is also recognised that the attribution of economic impact to a singular policy event can be somewhat subjective and would require to be set within the context of a range of other macro and micro economic factors.” As a result of this, CCC decided to prepare its own report based on an extensive survey so that NAC Cabinet might be better informed about the real and far-reaching impacts of the policy on the community of Cumbrae. 3. Respondent profile 346 responses were received. Many respondents reported long-term and complex relationships with the island, often extending over decades and involving a mix of: • Second homeowners 213 (6% not on Cumbrae) • Permanent residents 83 • Frequent visitors 59 • Owners of permanent homes 32 • Users of second homes (not the owner) 27 • Workers on the island 21 • Business owners 15 • Occupants of permanent homes (not the owner) 10 • Occasional visitors 9 • Tenants 5 This reflects a highly interconnected community, rather than distinct, singular groups. The employment status of respondents was similarly mixed, many people having multiple roles: • Retired 178 • Work full time (not on Cumbrae) 105 • Work part time (not on Cumbrae) 38 • Work part time (on Cumbrae) 19 • Work full time (on Cumbrae) 17 • Volunteer 13 • In education 4 • Unemployed 1 On average, respondents who were second homeowners reported spending 117 days a year on the island and had owned their second homes on average for 27 years.
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The reasons for owning second homes included: • For regular visits 162 • For use by an extended family 81 • As a stepping stone to becoming a permanent resident 43 • Because of work 11 • For occasional visits 4 4. Key findings Overall perception of the policy There was overwhelming opposition to the policy, and a belief that it is counterproductive to population growth: • 89% of respondents rated the impact of the second homes council tax premium on the island as negative or very negative. • Only 12% agreed that the policy would help free up homes for working families. • 74% agreed that second homes historically acted as a pathway to permanent residency. • 57% agreed that the policy will reduce the number of new permanent residents on the island. • 62% would contribute financially to a legal challenge to the policy. Direct economic impacts • 83% of second homeowners reported reducing their spending on the island as a result of the policy. • The £136 per month average reduction in spending on the island per respondent is equivalent to an annual reduction of £1,629. • Of 183 respondents, this equates to £300,000 a year, excluding wider multiplier effects, and excluding second homeowners who did not respond to the survey. • Assuming a conservative multiplier of 1.5, this equates to an economic shock to the island of £450,000, excluding second homeowners who did not respond to the survey (there are 450 second homes on Cumbrae). • Respondents reported reduced spending on property maintenance and improvements, local trades and contractors, retail and hospitality and general day-to-day spending. This suggests a direct and very significant impact on the local economy, particularly small businesses and the construction and maintenance sectors. It also creates a secondary long- term risk of unemployment, declining housing stock condition and the reduced overall attractiveness of the island. Of the businesses that responded to the survey, 67% reported a decrease in visitor numbers or spending.
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Community cohesion and social impact Respondents perceived the policy as socially divisive and damaging to long-standing relationships within the community: • 91% of second homeowners felt unfairly targeted by the policy. • 57% believed the policy had influenced their emotional connection to the island. • 40% reported increased tension between permanent residents and second homeowners. • 39% were visiting the island less frequently, with the main reason being cost pressures. Property ownership • 75% of second homeowners indicated they were considering selling their property. • 44% of second homeowners were considering converting their properties to a short term or long term let. • 71% of the second homeowners reported that their properties were in council tax bands A or B. These properties might not be suited to permanent occupation by working families. Policy design concerns 274 qualitative responses were submitted regarding the nature of the policy and how it might be changed. The views expressed are summarised below: • A strong overall opposition to the policy, describing it as excessive, with many calling for the premium to be scrapped. • A preference for lower rates, graduated rates or a gradual implementation of the policy. • A widespread view that second homeowners should pay the same council tax as permanent residents. • A desire for the policy to be more targeted to reflect property type, exempting or reducing rates for small homes or those not suited to permanent occupation by working families. • A perception that second homeowners use fewer local services and so higher local taxes are simply punitive. • Some conditional support for the policy if additional revenue raised is ring-fenced and spent locally, with greater transparency. • Concerns about a lack of voting rights despite higher taxation (“no taxation without representation”). • Perceived unfairness compared to other groups such as Airbnb/holiday lets or caravan owners paying less or no local tax. Other comments 175 other qualitative comments were submitted in response to an open final question. These additional thoughts are summarised below: • A strong perception that the policy is unfair, punitive, and targets second homeowners as an “easy revenue source”.
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• Frequent reports that second homeowners are ending long family connections to the island. • A belief that the policy will increase short-term lets and reduce council tax revenue overall. • A strong view that many properties are unsuitable for permanent residents, undermining the policy’s aims. • Concerns that the policy will fail to solve housing shortages, which are instead linked to a lack of jobs and new housing supply. • Repeated claims that second homeowners contribute significantly to the local economy and community life. • Concerns about declining property values and potential housing market disruption. • Views that the policy reflects a “one-size-fits-all” approach that ignores island-specific conditions. • Concerns that wider structural issues are being ignored, such as; ferry reliability, employment and infrastructure. • Some criticism of the consultation process and evidence base behind the policy. • A minority view that the premium is justified to increase permanent residency and reduce second home dominance. • An overall sentiment that the policy is short-sighted and risks long-term harm to the island’s sustainability. 5. Key conclusions • The policy is not meeting its stated objective and there is no confidence among respondents that it will improve housing access for local people. • There is clear evidence of a significant negative economic shock with reduced spending affecting local businesses and impacting construction and maintenance. • There is a risk to long-term sustainability. The policy may reduce inward migration, disrupt pathways to permanent residency and weaken long-term community stability. • The social consequences are significant. The policy is perceived as unfair, is creating division and is damaging emotional ties to the island. 6. Recommendations NAC must recognise that Cumbrae functions as a hybrid residential/seasonal economy and that it relies on part-time residents as key contributors, particularly in the winter months. There should be an immediate review of the 100% premium, considering: • A reduced rate. • Phased implementation. • Caps or thresholds based on property types. There should be broader impact monitoring, beyond property status movement to include: • Local economic indicators.
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• Population change. • Business performance. • Community cohesion. NAC should engage with affected stakeholders, establishing a structured dialogue with: • Second homeowners. • Other residents. • Local businesses. • Community organisations. 7. Final statement This survey demonstrates that the second homes council tax premium is not a neutral fiscal measure, it is a punitive, behaviour-changing policy with measurable economic and social consequences for a small, fragile island community. Limiting evaluation of its impact to property status changes risks missing its wider effects, many of which are already emerging within the community, and so missing the opportunity to either improve the policy or to introduce mitigations for it.