Charging of Double Council Tax on Second Homes
Argyll and Bute Council · 23 November 2023
Back to Argyll and Bute Council — 23 November 2023 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 23 NOVEMBER 2023 COUNCIL TAX TREATMENT OF SECOND AND LONG-TERM EMPTY HOMES 1. EXECUTIVE SUMMARY 1.1 The Scottish Government has concluded its consultation on Council Tax charges for Second Homes and Long-Term Empty Properties, which ran from 17 April 2023 to 11 July 2023. A Joint Working Group (JWG) on Council Tax and Local Government funding sources is now reviewing the consultation results and proposing changes for consideration by Leaders and Ministers. 1.2 One significant change the JWG has proposed is aligning the Council Tax premium for second homes with long-term empty properties. This change, already approved by CoSLA leaders, will enable local authorities to charge a double Council Tax (100% levy) on second homes instead of the current full Council Tax. Legislation is being drafted to grant councils these new powers. 1.3 The proposal suggests implementing the double Council Tax charge for second homes from 1 April 2024 and these powers could help mitigate the Housing Emergency and encourage second home owners in Argyll and Bute to either sell or rent their properties. 1.4 The number of second homes in Argyll and Bute has increased from 3,045 in 2022/23 to 3,235 in 2023/24, and a review of self-catering units in Non-Domestic Rates (NDR) is expected to further increase these numbers before billing for the 2024/2025 year. 1.5 Charging double Council Tax on these 3,235 second homes could generate £4.9 million in additional revenue, with an estimated collection rate of 85%, resulting in £4.177 million for the 2024/2025 fiscal year. 1.6 However, implementing this policy will involve additional costs, including staff resources to manage the changes, the increased customer inquiries and recover the extra debt. These costs are estimated at £94,000. Additionally, the Council Tax operating system OPENRevenues needs modifications to accommodate the double charges, with an estimated cost not exceeding £20,000 upfront plus £4,000 per annum support and maintenance. 1.7 In parallel, other changes to Council Tax have been considered, including a Scottish Government derived Council Tax freeze for 2024/2025 and a potential postponement of proposed increases in Bands E to H. Additional proposals, requiring primary legislation changes, include a possible 300% premium on Council Tax for second and long-term empty homes. This change, if implemented, could significantly impact Council Tax revenues in Argyll and Bute from 2025/26 onwards and put more pressure on property owners to bring these dwellings back into use or onto the Housing market which would mitigate the current Housing Emergency in the area. 1.8 It is being proposed that Councils be granted the power to charge double Council Tax on Second Homes, much like what is currently applied to Long-term Empty Properties. This strategic move aims to motivate second home owners to either sell or
Page 2
rent their properties. Furthermore, the potential financial implications, associated costs, and other proposed changes to Council Tax are being considered in light of these evolving circumstances. 2. RECOMMENDATION 2.1 It is recommended that Council agrees: (i) to implement the double charge, 100% Council Tax premium on second homes from 1 April 2024 should the legislation granting these powers be passed. (ii) that £0.020m of one-off costs are funded from existing earmarkings within the Service that are no longer required and recurring costs of £0.098m for staffing and system maintenance associated with the implementation of this charge be funded from the additional income recovered in excess of the £4m already built into the Budget Outlook. 3. DETAIL 3.1 The Scottish Government has recently evaluated feedback from its consultation on Council Tax charges for Second Homes and Long-Term Empty Properties. The consultation, which opened on 17 April 2023 and closed on 11 July 2023, asked 25 questions. The Council’s response to the consultation was approved at its meeting of 29 June is included in Annexe A. The Scottish Government’s published outcome of the consultation can be found here . 3.2 A Joint Working Group (JWG) on Council Tax and Local Government funding sources is considering the consultation outcome and bringing forward suggested changes for consideration by Leaders and Ministers. This group includes members of the CIPFA Directors of Finance Group, the Institute of Revenues Rating and Valuation (IRRV), CoSLA and the Scottish Government. To date the JWG has brought forward one change regarding bringing the Council Tax premium for second homes in line with long term empty properties, which in Argyll and Bute will allow us to move away from charging full Council Tax on Second Homes to charging a levy of 100% ie:- a double charge. CoSLA leaders agreed this change at their September meeting. Legislation is currently being drafted to reflect the new powers that this change brings for Councils. 3.3 It is proposed that, given the current Housing Emergency, the Council prepares to use these new powers when they become available to charge double Council Tax on Second Homes from 1 April 2024 just as it currently does for Long-term Empty Properties. This could incentivise existing second home owners to sell or let their properties in our area. 3.4 The number of properties classed as second homes in Argyll and Bute has increased from 3,045 in 2022/23 to 3,235 in 2023/24 following a review carried out by the Council Tax team during the year. In addition the Assessor at Dunbartonshire and Argyll and Bute Valuation Joint Board is conducting a review of self-catering units in Non- Domestic Rates (NDR) with many expected to move to Council Tax as a second home or a long-term empty property between now and the end of the current calendar year. Therefore these numbers are likely to continue to increase before we bill Council Tax for the 2024/2025 year. 3.5 Charging double Council Tax on the 3,235 properties classified as Second Homes in September 2023 will generate £4.9 million in additional Council Tax charges.
Page 3
Assuming in year collection of 85% of these charges, similar to the amount recovered in year for long-term empty properties, we can expect to recover £4.177 million in the 2024/2025 year as outlined in the table below. 3.6 There will be some costs associated with implementing the new policy. Additional staff resources will be required to administer the changes and deal with the extra customer contact that will be generated. These are estimated at £94,000 per annum or 1 FTE Senior Council Tax Officer at LGE8 to deal specifically with the volume of increased complaints and 2 LGE 6 Council Tax Assessment Officers to process the changes to accounts and collect the additional debt. 3.7 3.8 The Council Tax operating system OPENRevenues is not currently capable of allocating double charges to Second Homes. The supplier, Civica has been asked to provide a quote for the works required, this has not yet been returned. It is anticipated that the cost will not exceed £20,000 upfront with a maximum of £4,000 per annum support and maintenance. It is hoped that the cost could be shared by other Civica users in Scotland who will likely need to have the same functionality applied to their systems. It is proposed that the initial systems costs are funded by earmarkings with ongoing support and maintenance from the additional revenue that is generated from the scheme. Other potential changes to Council Tax 3.9 The First Minister recently announced that the Scottish Government would fund a Council Tax freeze for 2024/2025 to help people with the cost of living. In addition it is understood that plans to increase the level of charges in Bands E to H are likely to be postponed. 3.10 The JWG on Council Tax and Local Government funding sources has considered further areas of change which is currently being considered by Leaders. Proposals will require changes to primary legislation and therefore will not be introduced in time for 2024/2025. 3.11 One such change the JWG has considered is a possible 300% premium on Council Tax for second and long-term empty homes. The response to the Scottish Government consultation on the matter indicates that there is support for this change. The JWG has had initial discussions on the principle of introducing such a premium
Page 4
and have agreed to consider its progression alongside the publication of the consultation analysis and to test the interest for the change internally. 3.12 There are circa 900 long-term empty properties in Argyll and Bute so together with 3,235 second homes this would make over 4,000 properties eligible for a premium going forward. A move to increase the premium on these properties to 300% could have a significant impact on the amount of Council Tax that could be levied in Argyll and Bute from 2025/26 onwards and is something the Council will consider should the JWG and the Scottish Government progress further with this matter. 3.13 In Wales local authorities have had the power to increase the Council Tax on second homes by up to 300% since 1 April 2023. To date there has been no formal evaluation of the impact of the move however there are reports that despite the move being controversial it is increasing the number properties onto the market for sale. 3.14 Whilst it makes sense to use these new powers from 1 April 2024 to generate revenue and encourage houses to come onto the housing market for sale or let, the Council will explore its options to review the policy for charging double council tax on both long- term empty properties and second homes in 2024 to ensure that the policy is updated and producing the results that are required. At this time more information will be available from wales and from the work of the JWG in this area in Scotland. 3.15 Colleagues in Housing have been consulted and support the proposed changes. Next Steps 3.16 The policy to increase the Council Tax charges on second homes to a 100% premium is recommended for approval at the Council meeting on 23 November 4. CONCLUSION 4.1 The Scottish Government's thorough evaluation of feedback from the Council Tax charges consultation, which encompassed Second Homes and Long-Term Empty Properties, has initiated a series of significant considerations and proposals for policy changes. A Joint Working Group (JWG) is at the forefront of these discussions, with one notable proposition being the alignment of Council Tax premiums for second homes and long-term empty properties in the immediate term. This step, approved by CoSLA leaders, could be used in Argyll and Bute to mitigate the current Housing Emergency and incentivise second home owners to consider selling or renting their properties. 4.2 With the number of second homes on the rise in Argyll and Bute, this change could significantly impact Council Tax revenues. However, implementing this policy will come with associated costs, including staff resources and system modifications. In addition, the broader landscape of Council Tax is evolving, with the potential introduction of discretionary powers to introduce a 300% premium on second and long-term empty homes being considered for future years. These developments will be monitored closely and underscore the dynamic nature of Council Tax policies and their potential influence on Argyll and Bute's fiscal landscape in the years to come. 5. IMPLICATIONS 5.1 Policy – This is a new policy for charging double Council Tax on Second Homes 5.2 Financial – Circa £4.915 million additional Council Tax billed per annum with
Page 5
anticipated in year returns of circa £4.177 million. Total administrative costs of circa £0.118 million. 5.3 Legal – secondary legislation being drafted to allow change from 1 April 2024. 5.4 HR – Possibility of 3 new posts to administer the levies 5.5 Fairer Scotland Duty - None 5.5.1 Equalities – None 5.5.2 Socio-Economic Duty – None 5.5.3 Islands Duty - None 5.6 Risk – None. 5.7 Customer Service - None 5.8 Climate Change Implications - None Kirsty Flanagan, Section 95 Officer/ Executive Director with Responsibility for Financial Services Anne Blue, Head of Financial Services 25 October 2023 Policy Lead for Finance and Corporate Services: Councillor Gary Mulvaney For further information please contact:- Fergus Walker, Revenues and Benefits Manager Tel 01586-555237
Page 6
ANNEXE A – COUNCIL RESPONSE TO SCOTTISH GOVERNMENT CONSULTATION ARGYLL AND BUTE COUNCIL FINANCIAL SERVICES COUNCIL 29 JUNE 2023 RESPONSE TO SCOTTISH GOVERNMENT CONSULTATION: COUNCIL TAX FOR SECOND AND EMPTY HOMES AND NON-DOMESTIC RATES THRESHOLD 1. EXECUTIVE SUMMARY 1.1 On 17 April 2023 the Scottish Government published its consultation on Council Tax for second and empty homes, and non-domestic rates thresholds. The consultation closes on 11 July 2023 and a response has been drafted on behalf of the Council. This report seeks Council approval in respect of that response. 1.2 The issue of second homes and their impact on local communities has gained significant attention in Scotland in recent years. To address this concern, there has been a proposal to charge double council tax on second homes. 1.3 In response to the consultation we have considered the double charging of . Council Tax on second homes and its potential effects on homeowners, communities, and the overall housing market as well as the impact on tourism. 1.4 Overall we believe it would be of benefit for the Council to be given the direction in law to charge up to a 100% increase in Council Tax on second homes in the expectation that it will help to alleviate a lot of the pressure on the local housing market and local communities whilst generating some additional income for the Council to use to support the delivery of services in these areas. 2. RECOMMENDATION 2.1 It is recommended that the Council approves the consultation response attached as appendix 1 to this report. 3. DETAIL 3.1 There are circa 3,000 second homes in Argyll and Bute, 6.2% of our overall Council Tax register, higher than any other local authority area in Scotland and much higher than the national average of 0.9%. 3.2 There are a number of advantages that increasing the Council Tax charge on second homes can bring around economic fairness, encouragement of long-term rental and the deterrence of speculation and property market distortion. 3.3 There are also some potential disadvantages around the impact on homeowners, tourism and the local economy and enforcement and administration challenges.
Page 7
Page 364 Advantages 3.4 Economic Fairness Revenue Generation: Charging double council tax on second homes could provide a significant source of revenue for the Council, based on the current rate of Council Tax and an 85% collection rate on double charges, this could be as much as £4 million. This could be utilised to fund essential services, infrastructure development, and community projects. Redistribution of Wealth: Increasing tax on second homes may help promote greater economic equity by reducing the concentration of wealth among property owners and potentially supporting affordable housing initiatives. 3.5 Encouragement of Long-Term Rental: Increased Housing Availability: Higher taxes on second homes may discourage owners from keeping properties vacant or underutilised, leading to increased availability of rental housing for residents in need or increasing the number of properties for sale in the housing market. Boosting Local Rental Markets: By encouraging owners to rent out their second homes, the policy could strengthen local rental markets, creating a more vibrant and sustainable community. 3.6 Deterrence of Speculation and Property Market Distortions: Market Stability: The implementation of double council tax on second homes could discourage speculative investment in the housing market, thereby reducing volatility and the risk of housing bubbles dramatic price increases followed by dramatic reductions in prices. Promoting Homeownership: Discouraging excessive investment in second homes may redirect resources towards primary residences, potentially increasing homeownership rates. Disadvantages 3.7 Impact on Homeowners Financial Burden: Owners of second homes would face increased tax liabilities, potentially leading to financial strain for individuals or families who rely on such properties for personal use or as future retirement assets. Capping such an increase at 100% in law would at least reduce the possible burdens. Property Value Impact: Higher taxes on second homes may diminish property values in the longer term, negatively affecting homeowners' equity and potential returns on investment. However if we want younger local people to get a better chance to get onto the housing ladder locally then this can be an advantage.
Page 8
Page 365 3.8 Tourism and Local Economy Tourism Sector: Second homes often contribute to the tourism industry by attracting visitors who spend money in local businesses. Increased taxes may discourage property owners from making their homes available for short-term rentals, impacting the tourism sector. 3.9 Enforcement and Administrative Challenges Identifying Second Homes: Determining which properties qualify as second homes can be challenging, requiring accurate data collection and monitoring systems. Compliance Issues: Ensuring compliance with the double council tax policy may require additional administrative resources, and enforcing the tax on non- compliant property owners could be cumbersome. 3.10 These details are largely outlined within the proposed consultation response attach d in Appendix 1. Other important considerations in the proposed reply to the consultation 3.11 In terms of economic fairness, the paper does consider the giving Council's similar powers here as in Wales where they can charge an increase in Council Tax of up to 300% on second homes. In our view that would not be fair and a 100% increase like we can do at present for long-term empty properties would strike the right balance for us. We want these owners to have a chance of renovating their properties before bringing them to the market. Charging 300% increase in tax would reduce their capacity to make any changes to improve their property. 3.12 Similarly in terms of the enforcement and administration challenges bringing the second home charges to a maximum 100% like the charges on long-term empty properties will ease the administrative burden somewhat on the Council Tax team. The team are due to conduct a second home review shortly and this will be even more important now given the details within the consultation document. 3.13 The consultation document talks about the thresholds for defining self-catering units in Non-Domestic Rates. This is important as this could be an avoidance tactic used by second homeowners if the Council increase its Council charges on second homes. Increasing the number of days that properties need to be advertised and actually let to be classed as non-domestic properties is reasonable and would help to minimise the chances for tax avoidance. 3.14 Any extra income generated as a result of this change in policy needs to be made available for Council's to use as they see fit and must not be ring-fenced to cover Scottish Government priorities. This is made clear in the response.
Page 9
Page 366 4. CONCLUSION 4.1 The opportunity to charge double council tax on second homes in our area presents a number of key benefits and challenges. While it may promote economic fairness, encourage long-term rentals, and deter property market distortions, it could also impact the tourism sector. Balancing these factors is crucial for us when considering the implementation of such a policy, with careful consideration of its potential short-term and long-term effects on individuals, communities, and the overall housing market. However we currently don't have this opportunity and we strongly support the Scottish Government's proposal to allow us the discretion to increase these charges should we want to in the future. 5. IMPLICATIONS 5.1 Policy - None at present, any legislative change made by the Scottish Government could allow us to bring a new policy to Council in the future over the double charge of Council Tax on second homes. 5.2 Financial - none at present. However if the Council get the powers to vary the tax and we implement these powers it could generate circa £4milli on in extra income annually. 5.3 Legal – None. 5.4 HR - None at present, may need more processing/visiting staff is we implement any potential changes in the future. 5.5 Fairer Scotland Duty – None. 5.5.1 Equalities – None. 5.5.2 Socio-Economic Duty – None. 5.5.3 Islands Duty - Possibly positive change for the Islands with more housing availability for locals. 5.6 Risk - None. 5.7 Customer Service – None. 5.8 Climate Change Implications – None. Kirsty Flanagan, Executive Director with Responsibility for Financial Services/Section 95 Officer Anne Blue, Head of Financial Services 5 June 2023 Policy Lead for Financial Services and Major Projects: Councillor Gary Mulvaney For further information please contact- Fergus Walker, Revenues and Benefits Manager Tel 01586-555237
Page 10
Page 367 Non-domestic rates/ council tax on second and empty homes: Consultation Scottish Government Riaghaltas na h-Alba Respondent Information Form Please Note this form must be completed and returned with your response. To find out how we handle your personal data, please see our privacy policy: https://www.qov.scot/privacy/ Are you responding as an individual or an organisation? 0 Individual XO Organisation Full name or organisation's name I We will share your response internally with other Scottish Government policy teams who may be addressing the issues you discuss. They may wish to contact you again in the future, but we require your permission to do so. Are you content for Scottish Government to contact you again in relation to this consultation exercise? xD Yes 0 No I ARGYLL AND BUTE COUNCIL Phone number 01586 555237 Address KILMORY, LOCHGILPHEAD Postcode PA318RT Email Address Feraus.walker@aravll-bute.aov.uk The Scottish Government would like your permission to publish your consultation response. Please indicate your publishing preference: xD Publish response with name □ Publish response only (without name) □ Do not publish response Information for organisations: The option 'Publish response only (without name)' is available for individual respondents only. If this option is selected, the organisation name will still be published. If you choose the option 'Do not publish response', your organisation name may still be listed as having responded to the consultation in, for example, the analysis report.
Page 11
Page 368 We are satisfied with the current definition of a second home. It is fairly straightforward to administer for the purpose of assessing Council Tax liability and it gives a clear definition of a second home. Questionnaire Question 1 Do you think the current definition of a second home should continue to apply?: More information: For council tax purposes, the current definition of a second home is, 'a dwelling which is no one's sole or main residence and that is lived in for at least 25 days during the 12 month period of the council tax charge'. Answer: xD Yes □ No D Don't know Please give reasons for your answer. Question 2 Do you think the discount eligibility for job related dwellings and purpose built holiday accommodation is appropriate?: More information: Eligible job related dwellings and purpose built holiday accommodation are entitled to a council tax discount of 50%. Purpose built holiday accommodation is defined as a dwelling that is used for holiday purposes and has a licence or planning permission limiting its use for human habitation throughout the whole year. An example might be chalets or other types of holiday accommodation that are either unsuitable to be occupied all year round (their construction may mean they are only suitable to be lived in during the warmer months) or are not allowed to be lived in all year due to planning, licensing or other restrictions. Job-related dwellings are defined as homes owned by someone who has to live elsewhere for most or all of the time as part of their job, or the home the person occupies to undertake their job if the person has another home that is their main residence. Answer: xD Yes □ No D Don't know
Page 12
Page 369 The discount eligibility for Purpose Built Holiday Homes is fine. Most owners of chalets will only use the property during periods of the spring or summer months and are likely to be paying full Council Tax on their main residence. Often the park the chalet is in is not licenced for the full year so the owners of the chalet cannot use it for a period of the year. Therefore a 50% discount is reasonable on the chalet type accommodation in these circumstances. Likewise a job related dwelling is not a person's sole or main residence for Council Tax. It is important to rural businesses to be able to attract workers to job related dwellings in order to deliver goods and services in these settings therefore the 50% discount should remain in place. Also as the occupant be paying full Council tax at their main residence elsewhere then a 50% discount is suitable at their job related dwelling. With 6.2% of the council tax register taken up with second homes in Argyll and Bute, proportionately the highest in Scotland and well above the Scottish average at 0.9%. It is very difficult for local residents to be able to buy a property in many of our remote rural communities given local housing market conditions and number of second homes that we have in our area does not help. Second home owners do not contribute to the local economy all year round and additionally having a significant number of second homes in our area makes it harder to grow our population and increase the size of our local communities. By increasing the Council Tax charged on second homes we would encourage people to sell or let their second properties and if they decide not to then they will at least contribute more to the economy with increased local taxes. Please give reasons for your answer. Question 3 Do you think councils should be able to charge a council tax premium on top of regular council tax rates for second homes? More information: A premium is charging more than the full rate of council tax. Answer: xD Yes 0 No 0 Don't know Please give reasons for your answer. Question 4 If you have answered yes to question 3, what do you think the maximum premium councils could charge should be? More information: 50% premium is the same as one and a half times the normal rate of council tax. 100% premium is double the normal rate of council tax
Page 13
Page 370 Practically it would be easier to charge an increase of 100% to bring second homes into line long-term empty properties. The impact on the rural communities of second homes and empty properties has parallels although properties being empty does have a larger negative impact. If the council were to increase the second home charges to beyond those of empty properties ie:- by 200% or 300% it may encourage second home owners to leave their properties empty due to the lower level of Council tax charged. This would be counter-productive, at least second home owners tend to maintain their properties well and visit them at least 25 days per annum when they will spend monies in the local community. A similar increase in premium to empty properties would incentivise second home owners to sell or let their property or just pay the extra taxes, they would not benefit at all from leaving it empty. 150% premium is two and a half times the normal rate of council tax 200% premium is three times the normal rate of council tax 250% premium is three and a half times the normal rate of council tax 300% premium is four times the normal rate of council tax Answer: □ 50% x□ 100% □ 150% □ 200% □ 250% □ 300% □ Other (specify) 100% Please give reasons for your answer. Question 5 What factors should be taken into account by councils when deciding whether to introduce a premium on council tax for second homes? More information: A non-exhaustive list of potential factors is set out below: • numbers and percentages of second homes in the local area • distribution of second homes and other housing throughout the council area and an assessment of their impact on residential accommodation values in particular areas • potential impact on local economies and the tourism industry • patterns of demand for, and availability of, affordable homes
Page 14
Page 371 All of the factors above should be considered when setting a policy for charging extra Council Tax on second homes. Other factors in a local policy could include the availability of local tradesmen to assist homeowners to upgrade properties before selling or letting them. In rural areas these tradesmen can be difficult to find meaning that any renovation works can take some time to complete. This may contribute to the larger proportion of second homes and empty properties being in remote rural communities. There are also circumstances where people have been left a property by a relative who is deceased, this has been traditionally a significant reason for long term empty properties in the past. Some beneficiaries in these circumstances have no funds to do any works to the properties making it hard to sell or let. Being charged double Council Tax in these circumstances could be counterproductive. These factors could be considered though by individual council's as part of their policy setting process in respect of second homes/long term empties using their discretion to best fit this to their area.. • potential impact on local public services and the local community • other existing measures or policies that are aimed at increasing housing supply and the availability of affordable housing Councils may also decide not to use the powers or to disapply a premium for a specific period of time. A non-exhaustive list of examples of where a council might consider doing this include: • where there are reasons why the home could not be lived in as a permanent residence • where there are reasons why a home could not be sold or let • where the owner's use of their accommodation is restricted by circumstances not covered by an exception from the premium • where charging a premium might cause hardship Answer: Please list the factors and provide reasons for your answer: Question 6 If you do, or were to, own a second home please tell us what you would do if the applicable rate of council tax were to increase, and the 'thresholds' to be classed as self- catering holiday accommodation for non-domestic rates purposes stayed the same? More information: The current threshold for defining premises as self-catering holiday accommodation liable for non-domestic rates is it must be available to let for 140 days or more and actually let for 70 days or more in the same financial year. A private residential tenancy is when a registered landlord lets accommodation to an individual/s and it will be their sole or main residence. All tenancies created on or after 1 December 2017 are open-ended, which means a landlord will no longer be able to ask a tenant to leave simply because the fixed term has ended. Answer:
Page 15
Page 372 Not applicable, this response is provided on behalf of organisation not from the point of view of a second home owner. D The home is (or would be) already used as self-catering accommodation and liable for non-domestic rates D The home is (or would be) already used as a private residential tenancy and the tenant is liable for council tax D I would continue to use it purely for personal use and pay the higher rate of council tax D I would continue with split use between self-catering accommodation (below the non-domestic rates threshold) and personal use, and pay council tax D My second home already has/would have split use between self-catering accommodation (below the non-domestic rates threshold) and personal use. Rather than pay the higher rate of council tax, I would increase the number of days the accommodation is available to let and actually let in order to meet the non-domestic rates thresholds D My second home is purely for personal use. However, in order to stop paying council tax, I would make it available as self-catering accommodation for 140 days or more and actually let it for 70 days or more in order to be liable for non-domestic rates D I use my second home purely for personal use but I would change its use to a private residential tenancy D I use my second home as self-catering accommodation (below the non-domestic rates threshold) but I would change its use to a private residential tenancy D I will seek reclassification as an empty home and pay council tax D I will sell the second home Question 7 Do you think councils should be able to charge a higher premium than the current 100% (double the full rate) of council tax on homes empty for longer than 12 months? More information: Councils currently have the discretion to charge up to 100% premium on council tax on homes empty for longer than 12 months. Answer: D Yes x0 No D Don't know
Page 16
Page 373 100% increase in Council Tax is the right level of increase, it provides an incentive to homeowners to bring the property back into use. Tradesmen in rural areas are hard to get so the length of time these properties take to bring back into use can be considerable. The price of materials is also increasing. Any further increase in council tax charges could make the cost of bringing properties back into use totally unaffordable. We don't want to tax people so much that they can't afford to pay for the works required to bring properties back into use. Please give reasons for your answer. Question 8 If you have answered yes to question 7, what do you think the maximum premium councils could charge should be? More information: This question is asking what the maximum premium should be for homes that have been empty for longer than 12 months. The current maximum is 100% premium, which is double the normal rate of council tax. Answer: □ 150% □ 200% □ 250% □ 300% □ Other (specify) Please give reasons for your answer. I Not applicable Question 9 Do you think there should be a stepped approach to charging higher rates of council tax on long-term empty homes? More information: By 'stepped approach' we mean only giving councils powers to charge higher rates of council tax the longer the home is empty. For example, 100% premium at 12 months, 200% premium at 2 years, 300% premium at 5 years. 100% premium is the same as double the normal amount of council tax. 200% premium is the same as three times the normal amount of council tax
Page 17
Page 374 No, it is important to get the right balance between people willingly paying extra and simply being unwilling or unable to pay going forward. Our experience suggests 85% of people are prepared to pay the extra 100% increase for long-term empty properties until they are bought back in use. Increasing these charges beyond that level is likely to squeeze the taxpayer too much and they are unlikely to pay. Additionally the older the debt is the harder it is to collect in general terms so an increased Council Tax rate would only compound matters here. Efforts to recover arrears could lead the Council to taking sequestration action and even in these circumstances where sequestration is successful, if the debtor has no cash and the property is not is a condition to sell then there may be little or no return for the debt in any case. Finding a balance is important in terms of taxpayers paying more and not being able to pay at all, this sort of stepped arrangement doesn't strike that balance. 300% premium is the same as four times the normal amount of council tax. Answer: D Yes x0 No D Don't know Please give reasons for your answer. Question 10 Are there any exceptions that are not already taken into account, that should be, when charging a premium of council tax on homes empty for longer than 12 months? More information: Current discretionary powers for councils to change council tax liability for empty homes Status of empty home Up to 6 months 6-12 months 12 months+ 2 years+ No work Owner may Discount can Discount can be Discount can be underway and apply for an be varied varied between varied between not for sale or unoccupied between 50 50 and 10% or 50 and 10% or let and unfurnished and 10% discount can be removed discount can be removed exemption or premium of or premium of up to 100% can up to 100% can be applied be applied If undergoing 50% discount Owner may Discount can be Discount can be repair work to cannot be apply for a varied between varied between make them changed major repairs 50 and 10% or 50 and 10% or habitable or structural discount can be discount can be alterations exemption. removed or premium of removed or premium of
Page 18
Page 375 up to 100% can up to 100% can Discount can be applied. be applied. be varied between 50 and 10%. If 50% discount 50% discount 50% discount a premium of up being actively cannot be cannot be cannot be to 100% can be marketed for changed changed changed charged sale or let The current list of exemptions to council tax are: Exemption Dwellings last occupied by charitable bodies Dwellings last occupied by persons living or detained elsewhere Deceased owners Dwellings empty under statute Dwellings awaiting demolition Dwellings for occupation by ministers Dwellings occupied by students, etc. Repossessed dwellings Agricultural dwellings Dwellings for old or disabled persons Halls of residence Barracks, etc. Dwellings occupied by young people Difficult to let dwellings Garages and storage premises Dwellings of persons made bankrupt Visiting forces Period of Exemption Up to 6 months Unlimited Unlimited up to grant of confirmation 6 months after grant of confirmation Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited
Page 19
Page 376 There could be some additional flexibility built into the discretionary powers to extend discounts where there is significant works planned that have been subject to planning delays, or where it has been really difficult to get tradesmen especially in remote rural and/or island communities. Dwellings occupied by severely mentally impaired persons Prisons Prescribed housing support services accommodation Unlimited Unlimited Unlimited Answer: Please tell us about exemptions that you feel should apply and give reasons for your answer. Do not include exemptions that are already provided for. Question 11 What factors should be taken into account by councils when deciding whether to introduce a premium on council tax for homes empty for longer than 12 months? More information: A non-exhaustive list of potential factors might be: • numbers, percentages and distribution of long-term empty homes throughout a local area • potential impact on local economies and the community • patterns of demand for, and availability of, affordable homes • potential impact on local public services • impact on neighbours and local residents Councils may also decide not to use the powers or to disapply a premium for a specific period of time. A non-exhaustive list of examples of where a council might do this include: • where there are reasons why a home could not be sold or let • where an offer has been accepted on a home but the sale has not yet been completed and the exception period has run out • if the home has been empty for longer than 12 months but has been recently purchased by a new owner that is actively taking steps to bring the home back into use • if an owner has submitted a timely planning application or is undergoing a planning appeal that is under consideration by the council or Scottish Government. This means they cannot undertake work to bring the home back into use until that process is concluded • where charging a premium might cause hardship or act as a disincentive to bringing the home back into use e.g. where extensive repairs are actively being carried out Answer:
Page 20
Page 377 All of the factors above would form part of the decision to charge a premium on Council Tax for homes empty for longer than 12 months or indeed to disapply a premium going forward. Please list factors and give reasons for your answer. Question 12 If you do, or were to, own a home that has been empty for longer than 12 months, please tell us what you would do if your council decided to increase the maximum council tax charge above 100% premium? More information: Council tax premium: • 100% premium is the same as double the normal rate of council tax. This is the current maximum councils can decide to charge. This question asks what you would do if councils are given powers to charge more than this e.g. up to 300% premium/ four times the normal rate and the council where your empty home is located decided to apply an increase. • You may find it helpful to view what we mean by some of the options given e.g. short-term lets and private residential tenancies. Short-term lets: • In this consultation, short-term lets is a term used to refer to the whole or part of accommodation provided to one or more guests on a commercial basis that does not become the main residence of the guest/s. Self-catering accommodation is a type of short-term let and may be liable for council tax or non-domestic rates depending on the number of days they are available to let and actually let in the financial year. • Self-catering accommodation must be available for let for 140 days or more and actually let for 70 days or more in the financial year, to be exempt from council tax and liable for non-domestic rates Private residential tenancies: • A private residential tenancy is when a registered landlord lets accommodation to an individual/s and it will be their sole or main residence. All tenancies created on or after 1 December 2017 are open-ended, which means a landlord will no longer be able to ask a tenant to leave simply because the fixed term has ended. Answer: D Leave the home empty and pay the higher council tax D Sell the empty home D Use the home as a private residential tenancy D Use the home as a short-Term Let D Other (specify)
Page 21
Page 378 Not applicable, response is on behalf of an organisation not the owner of an empty property. If the proposals to levy double Council Tax charge on second homes goes ahead then there is likely to be a large increase in requests from property owners to the Assessor to move their property off of the Council Tax register and onto the Valuation roll for rates. An increase to current threshold would be the best way to discourage this and prevent a significant reduction in the overall value of the tax base. Please give reasons for your answer. Question 13 Do you think that the letting thresholds for self-catering accommodation for non- domestic rates should be changed? More information: The owners, tenants or occupiers of self-catering accommodation (who may be businesses, the public or the third sectors) may be liable for either council tax or non- domestic rates. This includes owners of second homes who use them for self-catering accommodation. The current threshold for defining premises as self-catering holiday accommodation liable for non-domestic rates is it must be available to let for 140 days or more and actually let for 70 days or more in the same financial year. Answer: xD Yes 0 No 0 Don't know Please give reasons for your answer. Question 14 If you have answered yes to question 13, what do you think the threshold for the number of days self-catering accommodation must actually be let for should be? More information: The current threshold is self-catering accommodation must actually be let for 70 days in the financial year. Answer: 0 50 days xD 100 days
Page 22
Page 379 Please give reasons for your answer. The season in Scotland is short, typically running from the start of April to the end of September with some extra weeks in October and December for short holiday periods. Therefore the season is roughly 200 days long so if a property is advertised for the season and actually let for 50% of the season, then a threshold of 100 days for actually letting out a self-catering unit is fair in our view. In Scotland a property should be available for let at least 50% of the year, April to September additionally at the Christmas period and for a short period in October. Therefore 200 days in our view would be a reasonable threshold in the definition of a self-catering unit. 0 140 days 0 180 days 0 Other (specify) Question 15 If you have answered yes to question 13, what do you think the threshold for the number of days self-catering accommodation must be available to let should be? More information: The current threshold is self-catering accommodation must available to let for 140 days in the financial year. Answer: □ 120 days □ 160 days xD 200 days □ 250 days □ Other (specify) Please give reasons for your answer.
Page 23
Page 380 Letting thresholds should be determined by the Scottish Government, if discretion is given to local authorities they could end up competing with each other to offer the best conditions to property owners. It could become a bit of a postcode lottery for the owners of these units in respect of whether their self-catering unit is rated on NOR or Council Tax depending on rules that would vary from one Local Authority area to another, this could be confusing for the public. Not applicable Question 16 Do you think councils should have discretion to change the self-catering accommodation 'days actually let' threshold, for their local area? Answer: D Yes x[J No D Don't know Please give reasons for your answer. Question 17 If you answered yes to question 16 do you think that councils should have discretion to: Answer: D Increase the number of days actually let only D Decrease the number of days actually let only D Increase or decrease the number of days actually let Please specify if you think councils should have discretion to do something else Please give reasons for your answer Question 18 Do you have any other comments on the non-domestic rates system in respect of self- catering accommodation?
Page 24
Page 381 Consideration should be given to making the Small Business Bonus Scheme (SBBS) less generous in NOR for self-catering units. These units normally attract a very low rateable value and are eligible for 100% relief through SBBS and therefore don't make any contribution to local tax in the area. There is a significant difference between a second home potentially paying double Council Tax in the future on a property and the property being on the NOR roll and attracting 100% relief. Limiting the relief to 25% or doing away with it altogether should be considered. Answer: Please provide your views Question 19 If you do, or were to, own a second home please tell us what you would do in the event that the applicable rate of council tax and non-domestic rate thresholds both increased? More information: The current threshold for defining premises as self-catering holiday accommodation liable for non-domestic rates is it must be available to let for 140 days or more and actually let for 70 days or more in the same financial year. A private residential tenancy is when a registered landlord lets accommodation to an individual/s and it will be their sole or main residence. All tenancies created on or after 1 December 2017 are open-ended, which means a landlord will no longer be able to ask a tenant to leave simply because the fixed term has ended. Answer: D The home is already used as a private residential tenancy D I would continue to use it purely for personal use and pay the higher rate of council tax D I would continue with split use between self-catering accommodation (below the thresholds to be liable for non-domestic rates) and personal use, and pay council tax D My second home already has/would have split use between self-catering accommodation (below the non-domestic rates threshold) and personal use. Rather than pay the higher rate of council tax, I would increase the number of days the accommodation is available to let and actually let in order to meet the non- domestic rates thresholds D My second home already has/would have split use between self-catering accommodation (above the non-domestic rates threshold) and personal use. Rather than revert to paying council tax, I would increase the number of days the accommodation is available to let and actually let in order to meet the higher non- domestic rates thresholds
Page 25
Page 382 Not applicable, response is provided on behalf of the local authority. D My second home is purely for personal use. However, in order to stop paying council tax, I would make it available as self-catering accommodation and let it for the number of days I needed to in order to be liable for non-domestic rates D I use my second home purely for personal use but I would change its use to a private residential tenancy D I use my second home as self-catering accommodation (below the non-domestic rates threshold) but I would change its use to a private residential tenancy D I would seek reclassification as an empty home and pay council tax D I would sell the second home D Other (specify) Please give reasons for your answer. Question 20 If you do, or were to, own a second home please tell us what you would do in the event that: a) council tax powers remained as they are for second homes (i.e. no provision for councils to charge a premium), but b) the 'thresholds' to be classed as self-catering holiday accommodation for Non- domestic rates purposes increased? More information: The current threshold for defining premises as self-catering holiday accommodation liable for non-domestic rates is it must be available to let for 140 days or more and actually let for 70 days or more in the same financial year. .A. private residential tenancy is \Nhen a registered landlord lets accommodation to an individual/s and it will be their sole or main residence. All tenancies created on or after 1 December 2017 are open-ended, which means a landlord will no longer be able to ask a tenant to leave simply because the fixed term has ended. Answer: D The home is already used as a private residential tenancy D I would continue to use it purely for personal use and pay council tax
Page 26
Page 383 Not applicable responding on behalf of the local authority D I would continue with split use between self-catering accommodation (below the thresholds to be liable for non-domestic rates) and personal use, and pay council tax D My second home already has/would have split use between self-catering accommodation (above the non-domestic rates threshold) and personal use. I would increase the number of days the accommodation is available to let and actually let in order to meet the higher non-domestic rates thresholds D I use my second home as self-catering accommodation (above the current non- domestic rates threshold). If I was not able to meet the new thresholds, I would change its use to a private residential tenancy D I would seek reclassification as an empty home and pay council tax D I would sell the second home D Other (specify) Please give reasons for your answer: Question 21 Please tell us how you think changes to council tax and/or non-domestic rates thresholds for self-catering accommodation might affect businesses in your area. Answer:
Page 27
Page 384 Increase in Council Tax being charged on second homes may lead to the properties being sold or let and turned into primary residences for people to assist with the supply of housing locally to accommodate key workers. An increase in applications to move from second homes in Council Tax to self- catering units in NOR may actually reduce the gross local tax chargeable by the local authority. However there may be an increase in tourism if second homeowners are forced to let out their second homes to other tourists to meet the definition of self- catering accommodation in NOR. This more transient tourism model would likely boost the local economy with more people visiting for shorter periods of time tending to eat out. Argyll and Bute currently has the highest proportion of second homes in Scotland at 6.2% of the overall Council Tax base. This is well above the 0.9% average in Scotland. There is a lack of affordable housing available for local people and a lack of both temporary and permanent accommodation for workers and key workers who may need to reside in the communities to work on specific projects. In addition recent experiences show that people from urban areas are buying houses as second homes at inflated prices effectively taking these properties out of reach of local people. Average earnings of rural populations are lower than householders living in urban areas. Applying increased levels of Council Tax on second homes in our area may incentivise second home owners to sell or let their properties freeing up housing that is available. This may encourage young people to stay in the area to live and work if there is more affordable housing available. If they don't want to sell or let their property then they will at least be pa'y ng more in local tax to support the delivery of vital local services. Please provide your views Question 22 Please tell us how you think changes to the maximum council tax rate for second and/or empty homes and non-domestic rates thresholds might affect your local area or Scotland as a whole (social, economic, environment, community, cultural, enterprise). More information: We have prepared a partial Business Regulatory Impact Assessment and undertaken screenings to initially consider other impacts. We would welcome your views and comments to help us expand on these assessments. Answer: Please provide your views Question 23 Please tell us how you think the changes identified might affect island communities. More information: We have prepared a partial Island Communities Impact Assessment and undertaken screenings to initially consider other impacts. We would welcome your views and comments to help us expand on these assessments.
Page 28
Page 385 These problems are particularly concentrated on island communities. Mull, Iona, Coll and Tiree and Islay and Jura all feature in the list of datazones with the highest proportion of second homes in Scotland, with 1 in every 4th /5th property a second home lived in for 25 days per annum minimum. The local population is ageing and declining and tourism whilst welcome is pushing up house prices making it very difficult for young local people who want to stay, live and work on the islands, to make a start in life there. Charging more Council Tax for second homes on these islands should help to free up some of this housing and bring it back into use for the local community or at the very least give the Council the opportunity to recover more local taxes and use these to further support remote rural and island communities. Typically families with more than one property are wealthier than families with one or no properties so the additional local taxes is aimed at the correct cohort of the population. Additionally we agree with the Scottish Government research which concludes that it does not consider there to be any equalities issues affecting people with protected characteristics arising from these proposals. Answer: Please provide your views Question 24 Do you think there are any equality, human rights, or wellbeing impacts in relation to the changes set out in the consultation? Answer: D Yes x□ No D Don't know Please give reasons for your answer. Question 25 Is there anything else you would like to tell us in relation to this consultation? Answer:
Page 29
Page 386 We strongly believe that local authorities should have the discretion to vary the Council Tax on second homes and long term empty properties particularly local authorities with a low population density. No additional income should be ring fenced by the Scottish Government for any specific purpose. This should be left to the discretion of the local authority. Council Please provide any further comments on the proposals set out in this consultation in the box below. Aboutyou Please tell us which of the following categories best describe you (select all that apply): • Owner of a Second Home • Owner of a Long-term Empty Home • Short-Term Let/Self-Catering accommodation operator • Council or Assessor • Organisation e.g. third sector or industry body • Member of the Public • Other, please specify Please tick whichever council areas apply to you (or select all of Scotland)?: • Aberdeen City • Aberdeenshire Council • All of Scotland • Angus Council • X Argyll and Bute Council X • City of Edinburgh Council • Clackmannanshire Council • Dumfries and Galloway • Dundee City Council • East Ayrshire Council • East Dunbartonshire Council • East Lothian Council • East Renfrewshire Council
Page 30
Page 387 • Falkirk Council • Fife Council • Glasgow City Council • Highland Council • Inverclyde Council • Midlothian Council • Moray Council • Na h-Eileanan Siar Council • North Ayrshire Council • North Lanarkshire Council • Orkney Council • Perth and Kinross Council • Renfrewshire Council • Scottish Borders Council • Shetland Council • South Ayrshire Council • South Lanarkshire Council • Stirling Council • West Dunbartonshire Council • West Lothian Council