Appendix a - Review of Policy to Charge Double Council Tax on Second Homes
Argyll and Bute Council · 26 November 2025
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1 APPENDIX A ARGYLL AND BUTE COUNCIL FINANCIAL SERVICES REPORT ON SECOND HOMES PREMIUM FOR COUNCIL TAX
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2 TABLE OF CONTENTS SECTION NO. SECTION NAME PAGE NO. 1 EXECUTIVE SUMMARY 3 2 BACKGROUND AND POLICY TIMELINE 3 3 LOCAL STATISTICS AND EVIDENCE 5 4 COMMUNITY FEEDBACK AND COMPLAINTS 6 5 HARDER CASES 7 6 FINANCIAL IMPACT 7 7 IMPACT ON THE HOUSING MARKET 8 8 REVENUE AT RISK 10 9 POTENTIAL USE OF RECEIPTS FOR HOUSING REGENERATION 12 10 COMPARATIVE EVIDENCE FROM ELSEWHERE 13 11 PLANNING AND REGULATORY COORDINATION 13 12 FORWARD LOOK: POTENTIAL FOR HIGHER PREMIUMS AND WATCHING WALES 14 13 CONCLUSIONS AND NEXT STEPS 15 APPENDIX 1 MOVEMENT IN SECOND HOMES FROM NOVEMBER 2023 TO MAY 2025 16 APPENDIX 2 SECOND HOME DATA BY HOUSING MARKET AREA 17 APPENDIX 3 MOVEMENT IN INEFFECTIVE HOUSING STOCK NOVEMBER 2023 TO MAY 2025 18 APPENDIX 4 EMPTY PROPERTY HOTSPOTS 19 APPENDIX 5 REVENUE AT RISK CALCULATION METHODOLOGY 20 APPENDIX 6 DATA SOURCES AND BASELINES 25
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3 1. EXECUTIVE SUMMARY The Council’s decision to apply a double Council Tax charge on second homes from April 2024 has already produced measurable results, with recorded second homes falling by around 15% and £3.86 million collected in its first year, exceeding the budget target. The policy was introduced to improve fairness, encourage properties back into permanent residential use, and generate additional revenue. Argyll and Bute continues to have the highest proportion of second homes in Scotland. According to the Scottish Government Council Tax Base return (September 2024), there were 2,961 properties recorded as second homes, around 6% of the total housing stock. Locally, however, 2,726 properties (5.5%) were subject to double charge as at the same date. The difference reflects definitional nuances: Scottish Government statistics include Purpose-Built Holiday Homes and Job-Related Dwellings, which are excluded from local figures because the Council is not permitted to apply the premium to those property types. Many former second homes have been sold, let, or reoccupied as main residences, while 98 have been identified as staff accommodation, directly supporting recruitment in hospitality, transport, health, and social care. Analysis of the wider housing market (see Appendix 2) also shows change in the combined share of second homes and self-catering units (SCUs) within the total dwelling stock, illustrating the broader trend across all forms of “ineffective” use. For example, in Coll & Tiree, this combined proportion fell by around five percentage points (from 36.3% to 31.6%), while in Kintyre and Helensburgh & Lomond, the reduction was less than one percentage point. These figures include SCUs recorded under Non-Domestic Rates and therefore reflect overall housing-use patterns, not just properties liable for Council Tax. While the direction of travel is positive, the impacts are complex, and causality cannot yet be attributed solely to the premium. Some properties have moved between categories of “ineffective stock,” and some owners remain undeterred by the higher charge. As at May 2025, around 13% of dwellings (6,839 properties) remain classed as ineffective stock, second homes, long-term empty dwellings, and self-catering units, down from 14% in November 2023 but still a significant constraint on housing supply, community sustainability, and local amenity. A number of post-announcement reclassifications require verification. The Revenues Team and Counter Fraud Team will undertake targeted reviews to ensure accuracy and protect the Council Tax base from fraud and error. Financially, the policy has performed strongly: £3.86 million was collected against a budget of £3.75 million, with a 97.3% collection rate and 85% of accounts paying by Direct Debit, indicating a stable and compliant tax base. Looking ahead, further work will consider how receipts might support housing regeneration and how future premium levels could be reviewed when new legislative powers come into effect from April 2026. 2. BACKGROUND AND POLICY TIMELINE On 23 November 2023 Argyll and Bute Council approved double council tax on second homes effective from 1 April 2024, utilising new powers conferred to it by the Council Tax (Variation of Unoccupied Dwellings) (Scotland) Amendment Regulations 2023. Further key dates include;
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4 • 8 February 2024. Revenue and Benefits Team issues letters sent to circa 3,000 second-home owners to notify them of the new regulations and the Council’s decision to increase Council Tax on second homes by 100%. • Early March 2024. Annual Council Tax bills issued many with the new premium included. • Contact from homeowners, Members of Parliament, Members of Scottish Parliament, elected members about changes made to Council Tax bills, and the implementation of the new policy, some formal complaints. • In May 2025 a review of the policy commences. Second homes tally at 2,582, down from 3,043 in November 2023 and 2,708 in May 2024. Pre-policy baseline Scottish Government data (Council Tax Base Return, September 2023) recorded around 3,235 second homes in Argyll and Bute. This represented 6.2 per cent of the overall Council Tax register, the highest rate in Scotland (national average 0.9 per cent). By September 2024, the number of properties recorded as second homes in Argyll and Bute had fallen to 2,961 (6.0 per cent) according to Scottish Government returns. Locally, the number of properties liable for the double charge, excluding Job- Related Dwellings (JRD) and Purpose-Built Holiday Homes (PBHH), reduced from 3,021 to 2,726 (5.5 per cent) over the same period. This distinction is illustrated in Table 1 below and provides a more accurate picture of properties directly affected by the Council’s policy. The data demonstrates a sustained decline in second-home prevalence, aligning with the policy’s stated objectives. Table 1: Comparison of national level second home statistics to properties in Argyll and Bute subject to double charge Time Line Scottish Government Stats CTB Return (September Annually) Local stats - properties subject to double charge (excl JRD and PBHH) No. % No. % September 2023 3,235 6.2 3,021 6.1 Pre 1 April 2024 Not recorded Not recorded 3,043 Not recorded September 2024 2,961 6 2,726 5.5 May 2025 Not recorded Not recorded 2,582 Not recorded Note: The Scottish Government’s published figures are taken from the annual Council Tax Base (CTB) Return, compiled each September, and include Job-Related Dwellings (JRD) and Purpose-Built Holiday Homes (PBHH). Local monitoring data includes these national figures where available and additional in-year updates. Percentages are not recorded for in-year monitoring points as the full CTB extract is not re-run at those times.
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5 3. LOCAL STATISTICS AND EVIDENCE Overall Reuse Table 2 summarises how properties that were classed as second homes in November 2023 are now being used as of 1 May 2025. A total of 770 properties have been removed from the second-home category since the policy announcement, reflecting a mix of reoccupation, reclassification and ongoing non-use. A full reconciliation of these movements is provided in Appendix 1. Table 2: - Outcomes for Properties Removed from the Second Homes Category Following Implementation of the Double Council Tax Charge (as at May 2025) Category Bought Back Into Use/Not in Use/Reclassified No. of Properties No. % Property Sold Bought Back Use 197 26 Owners moved, new sole or main residence Bought Back Use 173 22 Property Empty Not In Use 109 14 Staff Accommodation Reclassified 98 13 Property Let Bought Back Use 51 7 Property sold but still used as a second home Not In Use 51 7 Property No longer on Council Tax Not In Use 43 6 Usage Unknown at time 1 May snapshot Not In Use 22 3 Property Empty - Owner Deceased Not In Use 17 2 Reclassified as Purpose Built Holiday Home/Job Related Dwelling Reclassified 9 1 Grand Total 770 100 Since policy announcement, 770 properties have been removed from the second- home category. Of these: • 248 (32%) were sold although 51 of these are being used as a second home by the new owners who are willing to pay the premium, so these properties are still classified is ineffective stock. • 173 (22%) became the owner’s sole or main residence. • 109 (14%) of second homes are now empty properties where the owner claims they are not used for a minimum 25 days per annum as per regulations. • 98 (13%) identified as accommodation being used by people to support their employment. • 51 (7%) were let out on the rental market.
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6 • 43 (6%) are no longer on Council Tax, likely to have been shifted by the Assessor into Non-Domestic Rates as Self-Catering Units changing their use and avoiding the premium. • The remainder include natural churn (e.g. deceased estates, properties removed from council tax, or reclassified for holiday/occupational purposes and some where works continue to identify how they are being used). Staff Accommodation Of the 98 properties identified as accommodation being used by people to support their employment: • 33 are supporting the hospitality sector. • 16 linked to estates work. • 11 to the provision of public transport. • 9 to the fishing industry. • 8 each to GP/emergency services and Council social care/education staff. • Smaller numbers also support construction, and charitable organisations. This demonstrates clear added value for the local workforce, addressing long- standing housing challenges. Properties Brought Back Into Use • 421 (55%) of reclassified properties are confirmed as “brought back into use”. • 242 (31%) remain empty or not in use. • 107 (14%) reclassified for other legitimate purposes. The reduction in second homes is not uniform across the authority. Appendix 2 shows Housing Market Area proportions at both November 2023 and May 2025, highlighting both the variation in baseline levels and the different rates of reduction. For example, Coll & Tiree fell from 36.3% to 31.6%, while Kintyre declined more modestly, from 8.1% to 7.2%. 4. COMMUNITY FEEDBACK AND COMPLAINTS • Following the February 2025 letters, around 1,000 enquiries were received by the Council Tax teams over the period 8 February 2024 to 30 June 2025. • Common themes included: feelings of being “singled out”, arguments that second-home owners use fewer services, and some distress among those with inherited property. • Most contacts linked to the double charge of Council Tax for Second Homes were resolved informally as service enquiries however the Council did have 6 stage one complaints, 3 of these progressed to stage two of the corporate complaints process. One complaint was logged directly at stage two given its content and the level of engagement that the customer had beforehand. • Appeals: One customer exercised their right of appeal against the decision to charge double Council Tax on a second home, arguing that their primary residence is in the Middle East so they only have one home in Scotland. The Council’s decision to apply the premium was upheld by the First-tier Tribunal
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7 for Scotland (Local Taxation Chamber) following a hearing in Glasgow in December 2024. • Contact volumes have dissipated, although some Members continue to receive casework on harder cases. 5. HARDER CASES • Inherited properties: there were a few property owners of second homes with strong family ties but limited ability to pay. They had inherited the property and did not want to sell or let it for sentimental reasons and to maintain a link to the area and felt it was very difficult for them to pay double charge. • High-banded homes; some owners of high-banded second homes were aggrieved because they felt that their property was unlikely to ever form part of the affordable housing market but was still captured by the premium. They were unable to move into the property themselves and felt that they were providing support to the community by hosting community events when they were in the area. They felt the policy punished them unnecessarily. These cases illustrate the complexity of applying a blanket policy. 6. FINANCIAL IMPACT The first full year of implementation (1 April 2024 – 31 March 2025) has delivered strong financial results, with the policy exceeding expectations in both compliance and revenue performance. Table 3 below summarises payment behaviour across property bands. The “% Paying” column shows the proportion of liable accounts that have made at least one payment, while the “Total Payments (%)” column reflects the proportion of total billed revenue collected by year-end. The small difference between these measures reflects timing and partial-payment effects for example, some owners paid their standard charge but delayed or queried the premium element, while others missed a final instalment before 31 March. Table 3: Council Tax Payment Behaviour for Second Homes by Property Band (2024/25 Year-End Position) Band Count DD Paye r Not Paid % Paying Total Charge (£) Total Payments (£) Total Payme nts (%) A 537 445 4 99.26% 1,054,201 1,037,678 98.43% B 443 379 5 98.87% 1,104,100 1,065,308 96.49% C 443 379 5 98.87% 1,147,743 1,127,442 98.23% D 371 317 2 99.46% 1,079,884 1,068,435 98.94% E 404 344 3 99.26% 1,536,290 1,518,085 98.82% F 212 175 1 99.53% 1,008,052 994,807 98.69% G 152 126 3 98.03% 862,940 840,961 97.45% H 30 27 100.00% 217,442 213,559 98.21% TOTAL 2,592 2,192 23 99.11% 8,010,652 7,866,275 98.20%
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8 These are minor year-end timing differences rather than systemic non-payment. Every Band H account, for example, made some payment during the year, with only around £4,000 (1.8%) still outstanding at 31 March 2025, mainly among those not paying by Direct Debit. Where arrears arise, the Council’s normal recovery processes apply, including summary warrant procedures and post-warrant diligence. Given the nature of the properties involved and the high Direct Debit uptake (85%), virtually full recovery is expected in due course. • Total charge (base charges plus 100% levy): £8.011m • Total collected: £7.866m, a 98.2% collection rate, higher than for other property categories. • Second Home Levy charged (additional income due to policy): £3.970m • Levy collected: £3.864m (97.3% of levy). • Budget forecast: £3.749m outturn exceeded forecast by approximately £0.115m. Direct Debit Uptake • 2,192 of 2,592 properties (84.6%) are paying by direct debit. • This represents a higher than usual take-up for council tax payments and suggests second-home owners are actively choosing convenient, reliable payment methods. Payment Behaviour • Collection performance has been strong across all bands, with payment rates ranging from 96.5% to almost 99%. • Only 23 properties (0.9%) had unpaid Council Tax at year end. • Higher-band properties (E–H) are also paying reliably, with owners generally absorbing the cost as part of ownership. Policy Insight • The premium is proving to be a stable and predictable source of revenue. • Owners’ willingness to pay, particularly in higher-value bands, demonstrates that while the policy is effective financially, it is not deterring all buyers, aligning with evidence that some homes have been resold and remain in second-home use. • Combined with the reoccupation and staff housing data, this highlights that the premium is influencing behaviour for some owners but not universally. 7. IMPACT ON THE HOUSING MARKET Wider Housing Pressures (Pre-Policy Context) When the Council agreed in November 2023 to introduce a 100% premium (double Council Tax) on second homes from 1 April 2024, Argyll & Bute was already experiencing significant housing pressures: • In June 2023, the Council declared a Housing Emergency, with an Action Plan focused on four themes: enabling more market homes, enabling more
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9 affordable homes, supporting workforce housing, and making best use of existing homes. • Homelessness: 459 applications were received in 2024/25, a 7% reduction from 492 the previous year. However, average rehousing time increased to 35 weeks, up from 31 weeks. • HOMEArgyll register: as at April 2025, 3,024 households were on the waiting list, down 6% from 3,209 in 2024. During 2024/25, 633 households were allocated tenancies, a 13% fall from 763 the year before, and well below the target of 860 lets. • Private rented sector: landlord registrations fell to 4,454 in 2024/25, down from 4,531 in 2023/24 and 5,697 in 2022/23. This continues a trend of contraction in available rental stock, despite local efforts to stabilise the sector via the Addressing Depopulation Fund. These challenges predate the premium but show why the policy was needed to make better use of existing housing. Outcomes Since the Premium Came Into Effect (April 2024 onwards) The premium took effect from 1 April 2024. Since then: • Second homes reduced by 15.1%, from 3,043 in Nov 2023 to 2,582 in May 2025. • 421 properties have been brought back into use, including: o 198 sold, and have new owners o 173 reoccupied as main residences, o 51 let on the rental market. • 98 have been reclassified as staff accommodation • 148 properties remain empty, and 43 have been reclassified as self-catering units (SCUs) in the NDR system. • The levy generated £3.86m in 2024/25, exceeding budget forecasts. Ineffective Stock and Regeneration Comparison with Other Local Authorities Argyll & Bute consistently records the highest share of second homes in Scotland. Based on Council Tax Base returns (September 2023), 6.2% of all dwellings were second homes, compared with a Scottish average of just 0.9%. This sizeable differential underscores both the extent of the housing challenge in our area and the rationale for adopting a policy response such as the second-homes premium. Official Scottish Government statistics for September 2024 confirm 2,961 second homes (6% of dwellings) in Argyll and Bute, the highest proportion in Scotland. The Council’s local dataset, which excludes properties classed as Job-Related Dwellings and Purpose-Built Holiday Homes, records 2,726 properties (5.5%) subject to the double charge. The variance arises from definitional differences between national reporting and the local application of premium rules, and both sets of figures are accurate within their respective contexts.
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10 Argyll & Bute also has among the highest levels of empty homes in Scotland. At September 2024, 4,849 dwellings were recorded as empty, representing 9.9% of all stock compared with a national average of 2.8% (65,144 empty homes across Scotland). Combined with the second-home figures, this highlights the exceptional scale of ‘ineffective stock’ pressures locally. As of May 2025, around 13% of all dwellings (6,839 properties) are classified as “ineffective stock.” This category includes second homes, long-term empty dwellings, and self-catering units on the Council Tax register. Within this, around 8.4% are either second homes or self-catering units. On some islands the proportion is far higher, 35% on Coll & Tiree, and close to 20% on Mull & Iona and Islay, Jura & Colonsay. These figures are drawn from the Council’s own Council Tax database and exclude exempt properties such as MOD housing, student dwellings, or homes where the former occupant is in care or deceased, which are not currently part of the usable stock. A full breakdown of ineffective stock and its movement since November 2023 is provided in Appendix 3. To tackle these pressures, wider regeneration efforts are underway, complementing the second homes policy: • Empty Homes: 42 properties were brought back into use in 2024/25 through direct support to owners. • Health and Social Care Partnership project: repurposing empty homes for staff housing, helping to retain key workers. • Empty commercial units: under review for potential conversion into housing. • Town centre regeneration: multi-million-pound investments, in partnership with Historic Environment Scotland, to repurpose buildings and strengthen town centres. Together, these measures demonstrate that the premium is one tool within a broader housing and regeneration approach. Market Activity • House sales: 1,798 transactions in 2024/25, up 9% from 1,649 the year before. • Prices: the median sale price rose 2.8% to £180k, just below the Scottish average of £190k. Cash sales made up 53% locally (vs 33% nationally), underlining the role of lifestyle and second-home buyers. • New supply: only 78 completions in 2024/25 (34 private, 44 affordable), down 46% from 144 in 2023/24. • Rental market: the decline in landlord registrations underscores reduced supply, though local initiatives are working to mitigate this. Overall, sales and price growth show resilience, and there is no evidence of a local price shock arising from the premium. 8. REVENUE AT RISK The Council’s first year of operating a Council Tax premium on second homes has demonstrated strong financial performance. In 2024/25, £3.97 million was billed in second-home levy and £3.86 million collected, a collection rate of 97.3%. In 2025/26 to date, £4.40 million has already been billed, showing the premium is embedded and achieving near-full collection.
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11 The key issue is how sustainable this level of income will be as property classifications change. Around 50 properties have moved from the Council Tax base into the Non-Domestic Rates (NDR) system as self-catering units, reflecting customer decisions to obtain Short-Term Let (STL) licences and reclassify their homes. These moves reduce the levy base and represent a modest but real revenue risk of around £75,000 to £83,000 annually, depending on the average levy per property. There is also a potential forward risk where owners of second homes or empty dwellings who obtain STL licences subsequently seek reclassification by the Assessor as self-catering units. While this has not yet been modelled in the current analysis, data-matching between STL licence applications and the Council Tax register could provide an early indicator of such flows. This will be explored with Planning and Economic Development colleagues as part of the next phase of work, to refine projections of revenue at risk and housing-stock availability. At the same time, the Assessor, through the Dunbartonshire and Argyll & Bute Valuation Joint Board (DAB-VJB), continues to make a positive contribution to the Council Tax base by identifying properties that no longer meet the statutory letting thresholds for inclusion in NDR and reclassifying them as domestic dwellings. The 2022/2023 and 2023/24 canvasses, have both generated additional Council Tax yield as properties were transferred back from Non-Domestic Rates. Because these transfers were processed and billed in later financial years, the resulting gains span multiple years of account. Specifically, the 2022/23 canvass changes were processed in July 2024, generating backdated charges across 2022/23, 2023/24, and 2024/25, while the 2023/24 canvass was processed in February 2025, producing charges for 2023/24, 2024/25, and 2025/26. Together, these actions have delivered estimated additional base charges of £217,000, £296,000, £299,000 and £321,000 respectively within the 2022/23 to 2025/26 accounts. Although the 2023/24 canvass will be rerun in November 2025 under new Scottish Government regulations allowing review of those decisions, the gains already realised more than offset the levy reductions from properties moving into NDR. Overall, the balance of risks and gains indicates that the premium remains financially secure in the short term. Revenue at risk from displacement into NDR is more than offset by base gains from the DAB-VJB canvass process. The wider issue is that not all properties moving within or into Council Tax are available for housing use; some remain “ineffective stock” as empty homes, so the benefit to housing does not match the revenue benefit. Looking ahead, the Council will continue to monitor these dynamics, particularly as new legislative powers from April 2026 could allow premiums above 100%. Decisions on whether to use these powers will require further consideration, including lessons from Wales where higher premiums are already in place.
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12 Table 4: Summary of Levy and Canvas Gains Year of Account Levy Billed (£m) Levy Collected (£m) Levy at Risk from circa 50 SCU moves (£m) CT base gains from canvass (£m) Notes 2022/23 - - - 0.217 Estimate based on 22/23 canvass band mix 2023/24 - - - 0.296 Pre-levy 23/24 canvass provisional 2024/25 3.97 3.86 0.075 0.299 First levy year 2025/26 (year to date) 4.40 (in progress) 0.083 0.321 Early year position The assumptions and methodology used for this calculation are set out in Appendix 5. 9. POTENTIAL USE OF RECEIPTS FOR HOUSING REGENERATION The premium on second homes continues to generate significant additional income for the Council Tax base. While its primary purpose is to promote fairness and encourage reoccupation, there may be scope, subject to wider budget considerations, to explore how a proportion of receipts could in future support housing regeneration and community resilience initiatives. Council Tax data identifies concentrations of empty dwellings in specific data zones, most notably Campbeltown, Islay/Jura/Colonsay, Oban North, Knapdale, and Helensburgh town centre (see Appendix 4). The Council currently applies the premium consistently across the whole of Argyll and Bute. The enabling legislation, however, would permit a differentiated approach in future if Members considered that appropriate—for example, to reflect varying housing pressures or regeneration needs between localities. Any such approach would require careful assessment, stakeholder engagement, and formal approval by Council. It is also important to note that housing pressures are not confined to the identified hotspots. The declaration of a housing emergency in 2023 reflects the fact that need and demand exist across the region, and the Community Planning Partnership’s Outcomes Improvement Plan identifies housing as a top strategic priority. In addition, the negative impact of empty or under-used properties extends beyond housing demand: concentrations of empties contribute to poor urban quality, community decline, and wasted assets, even in areas where market demand is lower.
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13 Addressing these properties can therefore deliver wider community and economic benefit as well as housing outcomes. There is emerging evidence from smaller communities—such as Arrochar, Dalavich, and Lochgoilhead—where high levels of second homes and ineffective stock are affecting local sustainability. Any consideration of how levy receipts might be used should therefore balance area-based priorities in high-pressure markets with the broader aim of supporting regeneration and vitality in fragile communities. At this stage, the regeneration use of receipts should be regarded as an option for further exploration rather than a formal policy proposal. Future decisions will need to take account of the Council’s overall financial position, statutory duties, and Member priorities. 10. COMPARATIVE EVIDENCE FROM ELSEWHERE Wales Since April 2023, Welsh councils have had the discretion to levy premiums of up to 300% on second homes and long-term empty properties. Different local authorities have adopted different approaches, with some (e.g. Gwynedd, Monmouthshire) using higher premiums in response to acute housing pressures. Published Welsh Government reviews and early evidence suggest that: • Premiums have contributed to a reduction in recorded second homes in some areas. • There are reports of downward pressure on local house prices, particularly in high-premium councils. • Some displacement into the holiday let sector has been noted, mirroring risks also observed in Scotland (movement into the NDR system). Further direct engagement with Welsh local authorities is planned, to gather practical lessons on implementation, enforcement, and market impacts. Initial officer-level discussions with counterparts in Wales have already begun. Early feedback reinforces the importance of compliance tools and clear local decision-making on how any additional revenue is used, whether to support housing and regeneration priorities or to help balance the Council’s wider budget position. Full findings will be included in future reporting once further comparative evidence is available. Scottish Policy Horizon The Scottish Government has announced its intention to remove the current 100% cap on second-home and empty-home premiums. This would give councils discretion to set higher charges, similar to the Welsh model. For Argyll & Bute, this makes the Welsh experience highly relevant. It provides a live testbed of how higher premiums interact with housing markets, compliance behaviour, and community outcomes. 11. PLANNING & REGULATORY COORDINATION Under the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992 as amended (SSI 2021/489; updated by SSI 2024/10), self- catering accommodation must be available to let for at least 140 nights and actually let for at least 70 nights in the financial year to remain on the Valuation Roll (NDR).
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14 The Assessor at Dunbartonshire and Argyll and Bute Valuation Joint Board conduct an annual canvas or review of the use of SCUs in the previous year and, if the property doesn’t meet the criteria specified in the legislation or if the owner fails to submit evidence to support their application for the property to be on the NDR valuation roll then the property has to be assessed as a domestic dwelling for Council Tax purposes. As seen local evidence shows that 43 of the 770 properties that were second homes and are no longer second homes have gone across to NDR as SCUs. Colleagues in Development & Economic Growth and Planning have identified this regulatory gap as a possible threat to housing supply in some remote rural and island communities in Argyll and Bute. To address this, they are exploring: • Designating Short-Term Let Control Areas, under the Town and Country Planning (Scotland) Act 1997. o In such zones, changing a residential property into a short-term let becomes a material change of use requiring planning permission. • This creates a double barrier: o A financial deterrent (additional council tax), plus o A regulatory barrier (need planning permission to convert into a SCU). If this approach is adopted, it would help reduce policy leakage where second homes shift to NDR and avoid the premium. This inter-departmental coordination should be highlighted as a forward-looking, joined-up approach to ensure policy effectiveness. 12. FORWARD LOOK: POTENTIAL FOR HIGHER PREMIUMS & “WATCHING WALES” From 1 April 2024, Scottish councils have had discretion to charge up to a 100% premium on second homes. The Scottish Government, working with COSLA, has consulted on removing this 100% cap and is continuing to consider options through the Joint Working Group on Sources of Local Government Funding and Council Tax Reform. Any uplift above 100% would require primary legislation, so there is no confirmed timetable at present. Since April 2023, local authorities in Wales have been able to levy premiums of up to 300% on second homes and long-term empties. Councils there have adopted different approaches (e.g. 100%–300%), providing a live testbed of revenue, behaviour-change, and market effects. Monitoring Welsh outcomes (including case studies presented at IRRV and council reports) will help inform whether higher premiums, if enabled in Scotland, would be proportionate and effective locally. Engagement with Welsh councils is planned to deepen this evidence base, and findings will be reported at the next stage. For Argyll & Bute, this raises potential future considerations: • If Ministers legislate to permit >100% premiums, Members may wish to consider phased or targeted use (e.g. by area or property characteristics) alongside planning controls on self-catering conversions, to minimise displacement into NDR.
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15 • Continuing to gather evidence on market impacts (sales, prices, rental supply) will ensure the Council is prepared with a robust local case should higher-rate discretion become available. 13. CONCLUSIONS AND NEXT STEPS The impacts of the Council Tax premium on second homes are complex, and causality is not straightforward. It will take time to fully understand how far the policy has influenced housing supply, market behaviour, or ownership patterns, and continued monitoring will be essential before drawing firm conclusions. Nonetheless, the first year of implementation has delivered positive outcomes. Recorded second homes have reduced by 15% since November 2023, with strong rates of reoccupation, repurposing (including staff accommodation), and sales. Financially, the policy has performed well, raising £3.86 million in 2024/25 at a 97.3% collection rate, supported by high levels of compliance and engagement. Challenges remain. Around 19% of properties no longer classed as second homes are now recorded as empty, and others have shifted to non-domestic rating as self- catering units or changed ownership but remain in second-home use. Overall, 13% of dwellings remain classed as ineffective stock, with particularly acute pressures in some island and rural communities. Looking ahead, the Council may wish to: • Continue careful monitoring of movements between categories of ineffective stock, recognising the complexity of outcomes and the need to test assumptions. • Strengthen review and verification mechanisms for properties recorded as empty or reclassified, ensuring compliance and minimising avoidance or fraud. • Give consideration to how receipts are used in future, balancing the potential to support regeneration and community resilience with the need to address wider budget pressures. • Explore options for investment that align with the Community Planning Partnership’s Outcomes Improvement Plan, where housing is a top priority. • Consider the potential for higher premiums once new legislative powers are introduced, approaching this cautiously to avoid unintended consequences and protect the stability of the revenue base. • Use the new Community Regeneration Partnership funding as a pilot to demonstrate how levy income and external funds could work together to support local housing outcomes. In summary, the second homes premium is delivering positive results, but future decisions should be evidence-led, proportionate, and responsive to both fiscal sustainability and the wider objectives of housing and community regeneration.
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16 APPENDIX 1 – MOVEMENT IN SECOND HOMES FROM NOVEMBER 2023 TO MAY 2025 Reuse/Not reuse/Reclassification/New Second Home Property No.'s Reuse 421 Not reuse 242 Reclassified 107 New second homes -309 461 This appendix summarises the reconciliation of recorded second homes between November 2023 (policy announcement) and May 2025, showing the net reduction and the main outcomes for properties leaving the category. -400 -300 -200 -100 0 100 200 300 400 500 Reuse Not reuse Reclassified New second homes Change of Use From Second Homes
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17 APPENDIX 2 – SECOND HOME DATA BY HOUSING MARKET AREA, NOVEMBER 2023 AND MAY 2025
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18 APPENDIX 3 – MOVEMENT IN INEFFECTIVE HOUSING STOCK NOVEMBER 2023 TO MAY 2025. Ineffective housing stock is defined as second homes (liable for the premium), long-term empty dwellings (excluding exempt categories such as MOD, student, care, or deceased), and self-catering units on the Council Tax register. Figures are from the Council’s own Council Tax database and form the basis of the 13% ineffective stock figure quoted in the main report. A graphical breakdown by Housing Market Area is provided in this appendix. INEFFECTIVE HOUSING STOCK 1 NOVEMBER 2023 1 MAY 2024 1 MAY 2025 No of Properties No of Properties No of Properties SECOND HOMES 3,043 2,708 2,582 EMPTY DWELLINGS 1,998 1,732 2,523 SELF-CATERING UNITS 2,220 1,890 1,734 TOTAL PROPERTY NUMBERS 51,346 51,200 51,577
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19 APPENDIX 4 – EMPTY PROPERTY HOTSPOTS 2022 Data Zone Name HMA Empty Props Total Props %age Empty Campbeltown - 04 Kintyre 78 491 15.90% Whisky Isles - 01 (Jura & Colonsay) Isla, Jura and Colonsay 43 335 12.80% Oban North - 01 Lorn and the Inner Isles 56 547 10.20% Whisky Isles - 03 (Islay South) Isla, Jura and Colonsay 51 507 10.10% Cowal South - 05 Cowal 81 848 9.60% Rothesay Town - 07 Bute 47 500 9.40% Campbeltown - 05 Kintyre 37 418 8.90% Knapdale - 03 Mid Argyll 39 443 8.80% Whisky Isles - 02 (Islay North) Isla, Jura and Colonsay 58 677 8.60% Knapdale - 04 Mid Argyll 24 295 8.10% Rothesay Town - 01 Bute 27 332 8.10% Loch Awe - 01 Lorn and the Inner Isles 45 556 8.10% Knapdale - 02 Mid Argyll 37 462 8.00% Helensburgh Centre - 02 Helensburgh and Lomond 52 656 7.90% Mull, Iona, Coll and Tiree - 04 Mull and Iona 37 468 7.90% Cowal South - 01 Cowal 52 675 7.70% Helensburgh Centre - 03 Helensburgh and Lomond 36 478 7.50% Kintyre Trail - 02 Kintyre 38 517 7.40% Benderloch Trail - 02 Lorn and the Inner Isles 37 504 7.30% Knapdale - 01 Mid Argyll 40 553 7.20% Cowal South - 02 Cowal 36 508 7.10% Mid Argyll - 02 Mid Argyll 35 496 7.10% Mull, Iona, Coll and Tiree - 01 (Coll & Tiree) Coll and Tiree 55 788 7.00% Mull, Iona, Coll and Tiree - 05 Mull and Iona 34 489 7.00% Dunoon - 02 Cowal 23 347 6.60%
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20 APPENDIX 5 - REVENUE AT RISK CALCULATION METHODOLOGY This appendix sets out the detailed data, assumptions, and calculations used to assess revenue at risk from changes in the second-home base, including customer reclassifications, Assessor canvass outcomes, and collection rates by Council Tax band. 1. Customer-driven SCU moves Second-home owners applying for Short-Term Let licences and requesting a change of use with the Assessor to move from the Council Tax to the NDR base. Estimated at 50 properties. No band-mix data available; therefore, the average levy per account is used. 2. Base shrink A reduction of 3% per year assumed. The observed fall of 10% per year (Nov 2023– May 2025) is treated as a policy-shock effect. Around 40% of reclassifications are under review by the Council Tax and Fraud Team for possible avoidance, so the base-shrink assumption is softened to 3%. 3. Assessor canvass add-backs Properties moving from NDR to Council Tax as a result of Assessor reviews (70 days actual let / 140 days advertised). These add-backs are treated as provisional and are expected to diminish in scale over time as non-qualifying SCUs are filtered out. 4. Levy collection rate Assumed at 97.3%, based on 2024/25 actual performance. 5. Timing Figures are treated as annualised unless otherwise specified Financials by Band (2024/2025 Actual Collections) Band Count Charge (£) 2nd Home Levy (£) Total Charge (£) Payments to Charge (£) Payments to Levy (£) Total Payments (£) Total Payments (%) A 537 531,959 522,242 1,054,201 527,347 510,331 1,037,678 98.43% B 443 575,669 528,431 1,104,100 572,343 492,965 1,065,308 96.49% C 443 575,128 572,615 1,147,743 567,404 560,038 1,127,442 98.23% D 371 541,625 538,259 1,079,884 537,483 530,952 1,068,435 98.94% E 404 770,833 765,457 1,536,290 765,297 752,788 1,518,085 98.82% F 212 504,026 504,026 1,008,052 499,784 495,023 994,807 98.69% G 152 432,877 430,063 862,940 424,187 416,774 840,961 97.45% H 30 108,721 108,721 217,442 108,462 105,097 213,559 98.21% TOTAL 2,592 4,040,838 3,969,814 8,010,652 4,002,307 3,863,968 7,866,275 98.20% % paying by DD 84.57%
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21 MOVEMENT IN PROPERTY NUMBERS Category Property No. Revenue at Risk Assumption - Change in Council Tax Base Was Now Property Sold 197 Double Charge - Extra 100% Normal Charge 100% Owners moved, new sole or main residence 173 Double Charge - Extra 100% Normal Charge 100% Property Empty 109 Double Charge - Extra 100% 90% charge for 12 months, back to double charge thereafter Staff Accommodation 98 Double Charge - Extra 100% Normal Charge 100% Property Let 51 Double Charge - Extra 100% Normal Charge 100% Property Sold but still used as a second home 51 Double Charge - Extra 100% Double Charge - Extra 100% Property no longer on Council Tax 43 Double Charge - Extra 100% No charge at all 0% Usage unknown at time 1 May snapshot 22 Double Charge - Extra 100% Double Charge - Extra 100% Property Empty - Owner deceased 17 Double Charge - Extra 100% No charge at all 0% Reclassified as Purpose Built Holiday Home/Job Related Dwelling 9 Double Charge - Extra 100% 50% charge 770 New Second Homes -309 Normal charge 100% Double Charge - Extra 100% 461 ASSESSOR CANVAS (AC) OUTCOMES 2022/23 AC 2022/23 Assessor Canvass No. of Properties coming from NDR to Council Tax Initially 253 Those later going back to NDR 116 Properties remaining on Council Tax 137
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22 Treatment of Properties remaining for Council Tax Purposes; No. of properties Tax Treatment 2022/23 2023/24 2024/25 2025/26 Long-term Empty Property 57 10% Discount/90% Charge Double Charge 200% Double Charge 200% Double Charge 200% Closed Account (sold or let as primary residence) 39 100% charge 100% charge 100% charge 100% charge Second Home 22 100% charge 100% charge Double Charge 200% Double Charge 200% Primary Residences (sole or main res) 15 100% charge 100% charge 100% charge 100% charge Job Related or Purpose Built Holiday Home 3 50% Discount 50% Discount 50% Discount 50% Discount Exemption 1 0% charge 0% charge 0% charge 0% charge 137 SPLIT BY BAND - ACTUAL CHARGES 2022/2023 CANVAS Band No. of Properties Charge for 2022/23 Charge for 2023/24 Charge for 2024/25 Charge for 2025/26 A 28 22,190 21,250 19,334 22,109 B 27 24,630 26,768 22,420 23,265 C 26 26,923 27,563 24,372 29,984 D 19 24,935 26,349 22,805 23,816 E 13 21,841 22,046 17,423 17,942 F 8 17,627 18,749 19,230 21,133 G 12 31,451 30,111 27,746 28,652 H 4 12,425 14,134 10,872 11,948 Total 137 182,022 186,970 164,201 178,848
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23 2023/24 AC 2023/24 Assessor Canvass No. of Properties coming from NDR to Council Tax Initially 211 Those later going back to NDR 8 Properties remaining on Council Tax 203 Treatment of Properties remaining for Council Tax Purposes; No. of properties Tax Treatment 2023/24 2024/25 2025/26 Long-term Empty Property 178 Double Charge 200% Double Charge 200% Double Charge 200% Closed Account (sold or let as primary residence) 23 100% charge 100% charge 100% charge Second Home 1 100% charge Double Charge 200% Double Charge 200% Primary Residences (sole or main res) 1 100% charge 100% charge 100% charge Job Related or Purpose Built Holiday Home 0 50% Discount 50% Discount 50% Discount Exemption 0 0% charge 0% charge 0% charge 203
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24 SPLIT BY BAND - ACTUAL CHARGES 2023/2024 CANVAS Band No. of Properties Charge for 2023/24 Charge for 2024/25 Charge for 2025/26 A 32 28,401 29,594 32,513 B 32 33,134 32,642 34,139 C 23 27,349 27,480 30,201 D 39 52,068 49,738 52,020 E 42 73,659 76,483 80,951 F 25 54,324 53,000 57,853 G 8 20,857 22,595 25,468 H 2 6,523 7,248 7,966 Total 203 296,314 298,780 321,110
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25 APPENDIX 6: DATA SOURCES AND BASELINES Two different datasets are used in this report for analysing the impact of the second homes premium: • Financial dataset (2,990 second homes at Nov 2023) o This is based on Council Tax account numbers. o For most cases, one account = one property. o However, in some cases (e.g. large landlords such as Strathclyde Police), a single account may cover multiple dwellings. Payments are made at the account level and not apportioned across individual properties. o This dataset is therefore appropriate for financial analysis (charges raised, payments received, collection rates). • Property dataset (3,043 second homes at Nov 2023) o This is based on individual properties recorded in the monthly reporting/PPT dataset. o It gives the true number of dwellings classified as second homes. o This dataset is used for housing impact analysis (number of homes removed from second-home use, repurposed as main residences, let, or converted to staff housing). Reconciling the figures • The finance-led baseline used for some early movement analysis was 2,990 second homes. • The more accurate property-level baseline is 3,043. • To ensure consistency, category outcomes from the 2,990 baseline have been proportionately adjusted so that totals reconcile to the property dataset (3,043 to 2,582 by May 2025, a net reduction of 461 second homes). Future reporting • Financial analysis will continue to use the account-level dataset. • Housing/system impact analysis will use the property-level dataset. • This approach ensures both revenue and housing outcomes are reported on the most appropriate and accurate basis.