A rates levy for second homes?

An article from the Scottish Community Alliance on June 28th, 2022, based on a recent piece in The National

In a non-binding poll, 93% of residents from the Yorkshire holiday town of Whitby voted in favour of the Council intervening in the housing market by restricting the sale of new build houses to full time residents. This follows similar citizen-led ballots in Cornwall and Wales and suggests that communities are fast losing patience with the constant wringing of hands but lack of any concerted action by political leaders to correct the dysfunctional housing market. Arran Development Trust are now calling for a levy on all second homes to generate the funds to build more affordable homes for locals.

Nan Spowart, The National 

A SCOTTISH island development trust has called for levies on empty and second homes in order to build more affordable houses for local people.

Arran Development Trust (ADT) said it “empathised entirely” with the coastal community of Whitby which has just voted to limit the sale of second homes.

It is the latest tourist hotspot to demand action against wealthy buyers pricing local people out of the housing market by paying high prices for holiday homes.

The medieval Yorkshire fishing port, made famous by Bram Stoker’s Dracula, voted last week by 93% to restrict the sale of new-build and additional housing to permanent residents.

While not legally binding it is hoped it will send a message to council planners that “enough is enough”.

Around 28% of properties in the resort are second homes, but on Arran, which has 40% of North Ayrshire’s second and empty homes, the development trust said they would rather introduce a rates levy on them.

“Whilst the Arran Development Trust empathise entirely with the community in Whitby, we recognise the growing trend for second/holiday homes pricing local residents out of the market and the resultant detrimental effect on local services,” said a spokesperson.

“The ADT also recognise the second home/holiday home market is important to tourism areas and as such the ADT would rather support a less divisive approach, by advocating and introducing a financial contributory Second/Holiday Home Owners Fund specifically raised primarily through rates levies on empty and second homes with the funds raised being spent in the specific area contributing.

“For example, Arran has 40% of North Ayrshire Council second and empty homes, therefore Arran should receive 40% of the fund to spend on increasing the number of affordable homes on Arran.

“Additional, substantial area-specific revenue would provide affordable homes for current full-time residents and contribute financially and directly to the local economy, easing the ‘them and us’ culture which is appearing across the Scottish islands and rural areas.”

Martainn Mac a’ Bhaillidh, of Gaelic campaign group Misneachd, said he would fully support the levy idea but added that there should also be restrictions on who is permitted to buy homes in a community and the rental income of property should be regulated and restricted. In addition, empty homes also had to be brought back into use and land made available to build more.

“This is obviously part of the problem, but the shortage of homes isn’t just caused by an increase in population. Ownership of second homes as holiday homes or rental businesses reduces the available number of properties,” he said.

“Clearly if we urgently need to increase the number of homes, and reduce their price, we need to build more but also stop the market leaking properties at the same time.”

He said Scotland could move to a formal “two-tier” housing market in certain areas through licensing and regulation, alongside planning controls both of existing properties and conditions attached to new-build homes.

“Obviously, we need land reform to free up affordable house plots for self-builders. We need many more new-build homes, affordable homes and social housing, all permanently restricted to full-time occupation,” said Mac a’ Bhaillidh.

“We need short-term let control areas introduced and a robust licensing scheme. We need rent controls to ensure the affordability of long-term tenancy. We need restrictions on foreign investment in real estate. We need a progressive land value tax targeting large estate holdings as well as second, third and fourth homes.

“And we need all this to be robust, free from loopholes and properly funded and enforced. These are all steps which could be taken by the Scottish Government, working with local councils.”

Whitby follows St Ives (above), Fowey and Mevagissey in Cornwall in voting to limit sales of new-builds to full-time residents and the Welsh government recently increased the maximum level of council tax on second homes to 300% over concerns that tourist spots such as Gwynedd and Anglesey were being swamped by holiday lets. They are also tightening rules on self-catering accommodation being liable for business rates rather than council tax.

The Lake District National Park limits the use of homes given planning permission with new-builds only allowed where they help communities remain vibrant and are secured permanently for the original intended purpose using planning controls attached to the deeds.

Scottish campaigners argue this demonstrates that such measures are possible in a UK context.
“Solutions do exist,” said Mac a’ Bhaillidh. “The main difficulty is the reluctance of politicians to regulate the ‘free market’.”

Featured image shows Lochranza houses. Credit: Istockphoto