Review of Policy to Charge Double Council Tax on Second Homes
Argyll and Bute Council · 26 November 2025
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 NOVEMBER 2025 REVIEW OF POLICY TO CHARGE DOUBLE COUNCIL TAX ON SECOND HOMES 1.0 EXECUTIVE SUMMARY 1.1 This paper accompanies the draft “Report on Second Homes Premium Council Tax – September 2025” (Appendix 1). It summarises outcomes from the first full year of implementation, highlights challenges, and sets out next steps. 1.2 Eighteen months after introduction, recorded second homes have reduced by 15% (from 3,043 in Nov 2023 to 2,582 in May 2025). Over the same period, 770 properties left the second home category, while 309 new second homes were added, giving a net reduction of 461. Of the 770 that left, 421 have been brought back into active use (sold, let or occupied as a main home), 98 are now staff accommodation supporting key local sectors and 241 remain empty or not in use pending review. 1.3 Financially, the premium delivered £3.86m in levy income in 2024/25, exceeding budget (£3.75m), with a 97.3% collection rate and high compliance. 1.4 While outcomes are positive, challenges remain: 13% of dwellings remain “ineffective stock”, including empty homes and self-catering conversions. Some buyers remain undeterred by the premium. Comparative evidence from Wales underscores the importance of enforcement and transparent reinvestment. 1.5 The Housing (Scotland) Bill has now passed Stage 3, removing the national 100% cap on premiums for second and empty homes. If enacted from April 2026, this will give councils discretion to apply higher charges. The Council may wish to consider whether to use these powers in future, taking account of local housing pressures, wider budget needs, and potential market impacts. Any decision would benefit from further engagement with other authorities and a reasonable lead-in period to protect revenues and avoid unintended disruption in the housing market.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 26 NOVEMBER 2025 REVIEW OF POLICY TO CHARGE DOUBLE COUNCIL TAX ON SECOND HOMES 2.0 INTRODUCTION 2.1 In November 2023 the Council agreed to apply a 100% premium (double charge) on second homes from April 2024, intended to improve fairness, encourage properties back into residential use, and generate additional revenue to support local priorities. 2.2 The attached report provides the first comprehensive review of the policy’s impacts across housing supply, financial performance, and community response. 3.0 RECOMMENDATIONS 3.1 It is recommended that the Council – 1. note the key findings set out in this covering report and Appendix 1; 2. endorse continued monitoring of second-home movements, empty dwellings, and self-catering reclassifications; and 3. support further engagement with Welsh councils to build the evidence base for potential future premium levels above 100%.
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4.0 DETAIL Policy Impacts 4.1 Between November 2023 and May 2025 770 properties moved out of the second-home category and 309 new second homes were created, resulting in a net reduction of 461 (15%): Of those leaving the category, 421 (55%) were brought back into active use (sold, let, or occupied as a main home), 98 (13%) are used as staff accommodation supporting hospitality, health, transport and care sectors, 242 (31%) remain empty or not in use, requiring further review and 9 (1%) were reclassified as purpose built holiday homes and job related dwellings. 4.2 The overall level of “ineffective stock” in Argyll and Bute remains high at 13% of dwellings, with acute concentrations on islands such as Coll & Tiree. Financial Outcomes 4.3 Levy income in 2024/25: £3.97m billed, £3.86m collected. Exceeded budget by £0.115m. 84.6% of second-home owners pay by Direct Debit, showing strong compliance. Payment rates across all bands are consistently above 96%. Community Feedback 4.4 Around 1,000 enquiries were managed by the Council Tax administration team in early 2025, however there was only 6 formal complaints, 3 of which progressed to stage two. One appeal was taken to the Scottish Local Taxation Chamber (SLTC) as a first-tier tribunal. The judge upheld the Council’s decision to apply the second home levy in this case. 4.5 Concerns remain in some areas, particularly from owners of inherited properties who have an emotional connection to them, and from owners of high-value homes who argue their properties are unlikely ever to provide affordable accommodation. Nevertheless, the regulations are designed to discourage property hoarding, release dwellings back into local use, and contribute to easing housing pressures. Housing Market 4.6 There is no evidence of price shock; house sales and prices increased in Argyll and Bute in 2024/2025 in line with national trends. Rental market tightening continues, but re-use of second homes has contributed some additional stock. The Council declared a housing emergency in 2023, the premium forms one part of the wider response. Comparative Evidence 4.7 In Wales, councils have discretion to levy premiums of up to 300%. While no authority has applied the maximum rate on second homes, some have imposed up to 300% on long-term empty properties, reflecting the wider negative impact that derelict or unused buildings can have on communities. By contrast, second homes, even if occupied only 10–20% of the year, can bring some contribution to the local economy through visitor spending. 4.8 For example, Gwynedd applies a 150% premium on second homes and has strengthened its compliance arrangements by introducing a data-matching system (InfoShare) that uses credit-reference information to verify an
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individual’s true main residence. This approach helps identify avoidance, such as owners reclassifying properties incorrectly to reduce liability. Similar techniques may be useful locally: around 40% of properties no longer declared as second homes in Argyll and Bute are currently subject to detailed review to ensure declarations are accurate and to protect the integrity of the Council Tax base. 4.9 Early officer-level engagement confirms that compliance tools and transparency on revenue use are key to community acceptance. This intelligence will inform future consideration should Scottish Ministers legislate to permit premiums above 100%. Legislative position and timing in Scotland 4.10 The Housing (Scotland) Bill was passed at Stage 3 on 30 September 2025, including the provision removing the current 100% cap on council tax premiums for second and long-term empty homes. Commencement of these new powers will be set by Ministers via a commencement order; the Act does not fix a date. 4.11 While the Act does not fix a date, if the remaining legal steps proceed as planned, a 1 April 2026 switch-on is a reasonable assumption, in line with the start of the financial year, but this remains subject to the formal commencement regulations and any transitional provisions. Revenue at Risk 4.12 Revenue at risk from properties shifting into Non-Domestic Rates is offset by Assessor canvass add-backs. This helps maintain stability in the levy base, but ongoing monitoring is required. Forward Look 4.13 Colleagues in Planning are preparing proposals on the potential designation of Short-Term Let Control Areas, with a paper expected to come to Council in Spring 2026. This regulatory measure would complement the second-homes premium by limiting displacement into the self-catering sector. The removal of the national 100% cap on premiums is closely aligned, and both strands should be considered in the same timeframe to ensure a coherent local approach to housing supply and community sustainability. Careful Use of New Premium Powers 4.14 If the Council gains discretion to apply premiums above 100% from 1 April 2026, this cannot simply be “switched on” without significant risk. Excessive charges could drive avoidance behaviour, alter ownership habits, and ultimately reduce revenues. They could also create unintended disruption in the housing market. 4.15 Any future decision to increase the premium above 100% would benefit from careful preparation and evidence. In particular, it would be advisable to: • Review the experience of Welsh authorities that have introduced higher rates, to understand both outcomes and potential unintended consequences; • Engage with local stakeholders, including property owners, letting agents, and community representatives, to test potential impacts and compliance; and
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• Allow a reasonable lead-in period before implementation, giving existing second-home and empty property owners time to make informed decisions about the use or sale of their properties. 4.16 Ultimately, the decision on whether and how to increase the premium rests with Members, but a measured and evidence-led approach would support transparency and minimise the risk of unintended consequences. 5.0 CONCLUSION 5.1 The first year of the second homes premium has delivered a measurable reduction in recorded second homes, strong financial returns above budget and evidence of properties being brought back into use, including staff accommodation in key sectors. 5.2 Challenges remain in addressing empty dwellings, self-catering reclassifications, and the broader housing emergency. Ongoing monitoring and engagement with Welsh counterparts will ensure Argyll & Bute is prepared for potential future policy changes. 5.3 Looking ahead, if the new powers expected from April 2026 permit premiums above 100%, these should be considered with care. Any increase would benefit from an evidence-led approach, further engagement with local stakeholders, and a reasonable lead-in period to allow owners time to plan and adapt. Excessive rates could risk avoidance behaviour, revenue loss, or market distortion, so a balanced and transparent approach is advised. 6.0 IMPLICATIONS 6.1 Policy - The policy aligns with the Local Housing Strategy objective to increase effective housing supply and supports corporate priorities on sustainable communities. It operates alongside planned regulatory measures (e.g. potential use of Short-Term Let control areas) to reduce displacement into Self-Catering Units (SCUs). A joined-up approach with Housing, Planning, and Economic Development is proposed, with further options (e.g. use of higher premiums if enabled nationally) to be brought back if appropriate. 6.2 Financial - Year 1 outturn exceeded budget (high collection rate and strong Direct Debit uptake). Future receipts remain exposed to behavioural change (e.g. movement into Non-Domestic Rates), data cleansing adjustments, and macroeconomic conditions. Mitigations include continued targeted recovery, monitoring of arrears and reconciliation to the Council Tax base. 6.3 Legal: The policy is implemented within existing legislation on Council Tax and premiums for second homes, and classification rules for self-catering accommodation. Ongoing legal considerations include data protection/compliance in reviews, fair procedures for discretion and appeals, and the lawful process for introducing planning controls (e.g. Short-Term Let control areas) if pursued. Legal Services will be engaged on any proposed changes and communications. 6.4 HR: Implementation has generated additional workload in the Revenues team and the Counter Fraud will soon be engaged in reviews, appeals and further enquiries. Short-term pressure will be managed through targeted prioritisation.
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Staff training on policy intent, exemptions, and evidence requirements will continue. 6.5 Customer Service: Initial enquiry numbers were high and difficult but have now stabilised. Clearer guidance, FAQs, and templated responses are in place, with signposting to payment options and support. We will continue to track themes (hard cases, inherited properties, high-band homes), refine messaging, and ensure consistent handling across channels. 6.6 Risk: Key risks; Displacement into SCU/NDR undermining outcomes, data quality and the risk of fraud and error in declarations from owners. Reputational risk around perceived fairness of the charges, potential legal challenges to classification and decisions that will be heard by the Scottish Local Taxation Chamber. 6.7 Climate Change: Bringing existing dwellings back into permanent use can reduce pressure for new build and associated embodied carbon. Staff accommodation closer to workplaces may reduce commuting and travel emissions. No significant negative climate impacts are anticipated. 6.8 Fairer Scotland Duty: The policy aims to address socio-economic disadvantage by improving access to housing for those on lower and median incomes and by raising resources for local priorities. A proportionate assessment indicates likely positive impacts through increased availability of housing and potential targeted reinvestment in that area. We will continue to consider cumulative effects (including on rural and island areas) and report any unintended consequences. 6.9 Equalities – Protected Characteristics: The premium applies by property use, not personal characteristics. No direct differential impact is identified across protected groups. Indirect effects (e.g. improved access to housing for families, workers, and older residents) are expected to be positive. Equalities impacts will be monitored through complaints/themes and service feedback. 6.10 Consumer Duty: The report considers impacts on consumers of Council services, including clarity of information, routes to challenge, and support for potentially vulnerable consumers (e.g. inherited properties). Actions include plain-English communications, transparent evidence requirements, and clear signposting to payment options and assistance. 6.11 Islands Communities - Given the distinct housing pressures and labour market dynamics on our islands, the policy is particularly relevant there and may have greater impact than in some mainland areas. Early evidence shows benefits via staff accommodation and reuse; risks include displacement to SCU and effects on seasonal economies. We propose continuing to screen for Island Communities impacts and to develop island-specific metrics (by Intermediate Zone) to inform any adjustments. 6.12 Children’s Rights and Wellbeing: No direct impact on children’s rights is identified. Indirect positive effects are anticipated through increased availability of permanent homes for families and workforce stability in children’s services, education, and health.
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Executive Director Kirsty Flanagan Executive Director with responsibility for Finance Policy Lead Councillor Moreland 1 October 2025 For further information contact: Fergus Walker, Revenues and Benefits Manager Fergus.Walker@argyll-bute.gov.uk Tel: 01586 555237 Appendix A - Report on Second Homes Premium for Council Tax