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Tax Changes for Second and Empty Homes

Today the ASSC received a letter from Tom Arthur, Minister for Community Wealth and Public Finance. In it he announced that the First Minister Humza Yousaf has announced that the Scottish Government will be consulting on proposals regarding the Council Tax treatment of second homes and long-term empty homes.

The public consultation has now been launched and they are seeking your views.

“A Joint Working Group, comprising Scottish Ministers and COSLA, considered the policy options and endorsed a proposal to consult on the measures, with the questions then developed in partnership with COSLA.

Nationally the aim of the measures that we are consulting on is to encourage more residential accommodation to be used as homes for living in and for these to be occupied for more of the time. However, this is not about a one size fits all solution. Each Council should be able to decide how to achieve the right balance in the use of housing to meet local needs and to support thriving communities. The measures we are consulting on deliver on commitments in the Scottish Government’s Housing to 2040 Strategy and Bute House Agreement with the Scottish Green Party to enable councils to make best use of their housing stock.

We also recognise that the relationship between council tax and non-domestic rates in terms of balancing our commitments is important to consider here. That is why we are also taking the opportunity to invite views on the thresholds at which self-catering holiday accommodation becomes liable for non-domestic rates, and, importantly, if councils should have any discretion to better reflect local circumstance. I recognise this part of the consultation may be of particular interest to some of your members.

Briefing: Distinguishing between Empty Homes, Second Homes and Self-Catering Accommodation


  • The issue of second homes and holiday lets should not be conflated. They are different types of property and should be treated as such. Clear definitions are therefore imperative.
  • The Scottish Government has launched a new consultation, ostensibly on second homes and empty homes, yet it also brings in an entirely separate property type into the debate – self-catering accommdation.
  • The consultation asks if there should be changes to the definition of when a property offering self-catered accommodation becomes liable for non-domestic rates, which has recently been dealt with by recent regulations.
  • Self-catering properties are already grappling with the changes associated with licensing and planning regimes during extremely challenging times for Scottish tourism and the imposition of further changes which may impede recovery is the last thing the sector needs.
  • While seeking to clamp down on second and empty homes, the Scottish Government must be mindful of any unintended consequences for the self-catering sector and the thousands of small businesses which form an integral part of our tourism offering, particularly in rural and remote areas.
  • Short-term lets are often presented as being a leading cause of Scotland’s housing crisis. However, it is important to place the debate in a holistic context – for instance, noting the number of empty homes in Scotland, demographic changes, and the need to build more homes – while recognising the value of tourist accommodation to the Scottish economy and local communities.

Key Definitions

Self-Catering Accommodation is defined as:

“2. Any lands and heritages –
a) which are not the sole or main residence of any person; and b) which either – 

  1. i) are made available by a relevant person for letting, on a commercial basis and with a view to the realisation of profit, as self-catering accommodation for short periods amounting in the aggregate to 140 days or more in the financial year; or 
  2. ii) if they have not been made so available for letting in that year, are intended by a relevant person to be made so available for letting in that year and the interest of the relevant person in the lands and heritages is such as to enable him to let them for such periods.” (Source: Scottish Assessors Association).

In order to be classed as a Non-Domestic property and liable for Non-Domestic rates instead of Council Tax, a self-catering property will be required to provide evidence of 70 days of actual letting as well as 140 days of intention to let from 2022-23 onwards. This is part of the The Council Tax (Dwellings and Part Residential Subjects) (Scotland) Amendment Regulations 2021 (legislation.gov.uk), dealt with recently by the Scottish Parliament.

In contrast, empty properties are those which have been empty for more than 6 months and are liable for council tax, while second homes are defined as properties that are furnished and lived in for at least 25 days in a 12-month period but not as someone’s main residence.

Unlike second and empty homes, self-catering properties provide multiple benefits for local communities, with the industry providing a £867m annual boost to the Scottish economy, generating 2.4 million visitor nights per year and supporting 23,979 jobs. There are currently 17,760 self-catering units on NDR, with 80% of ASSC members benefiting from the Small Business Bonus Scheme.

Such self-catering properties are legitimate, bona fide businesses whose owners depend on the money generated for their livelihood – it is not a hobby or a way to supplement their income.

Underpinning any decision to regulate the short-term letting sector is the need for robust, empirical data.

A Holistic Approach to Housing Policy

  • Imposing barriers or further regulating self-catering units will not ameliorate housing challenges in Scotland. While moves to tackle second homes and bring empty homes back into more productive use should be welcomed, we need a much more holistic approach: that is, empty homes, second homes, housebuilding and affordable housing.
  • The Scottish Government must also evaluate whether existing policies, such as the onerous short-term let licensing scheme, may actually exacerbate some of the issues they are trying to solve. For instance, concerns have been expressed that licensing could actually increase the number of second homes.
  • Many self-catering properties could not be classified as ‘affordable housing’ and if more operators leave the market due to the regulatory burden, there is nothing to stop an owner from using their property as a second home for themselves, or to sell it to an individual who will then use it as a second home.
  • The housing challenges facing Scotland are far more multifaceted than the existence and growth of short-term and holiday lets alone. For instance:
  • in January 2023 there were 42,865 long-term empty homesin Scotland. These empty homes could be utilised for far more productive purposes and provide homes for those who need.
  • There were65 million dwellings in Scotland in 2020. Of these, 90,500 dwellings (3%) were vacant or long-term empty and 24,500 (1%) were second homes. 
  • Empty and second homes are concentrated in different parts of the country. For example, remote rural areas have a higher percentage of empty and second homes than urban areas. However, City of Edinburgh is a hotspot for empty homes in Scotland.
  • When housing demand and the level of empty housing is set against the number of self-catering units, it suggests self-catering activity is not of a scale sufficient to affect housing supply issues in Scotland. Ultimately, building too few homes remains the core cause of Scotland’s housing problems, not the holiday let sector.
  • Policymakers should not use holiday accommodation as a means to solve housing challenges in Scotland, instead focusing on building more affordable homes and tackling the scourge of empty properties.

The consultation runs until 11 July 2023. I would encourage all members to respond.

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