Just tinkering at the edges of the housing emergency

When is a consultation not a consultation? When it is sent out by the City of Edinburgh Council asking for peoples’ thoughts on introducing a substantial council tax levy for second homeowners. The Council recently announced a public consultation to allow owners to share their views on a proposed 300 per cent tax increase for second homeowners.

However, they gave the game away in the consultation document when they said “while councillors will review the responses to this survey and the integrated impact assessment, it is expected that the increase in premium will now take effect from October”. This is a consultation in name only, a tick box exercise to pretend that they want to hear the opinions of property owners, but the decision is already made.

This is performative politics at its worst and is echoed around Scotland as many councils have already announced mind-boggling tax increases. These tax penalties on second homeowners range from a 225 per cent levy in the Scottish Borders to 300 per cent charges in Edinburgh, Glasgow, and Highlands and an extraordinary 500 per cent in Midlothian which is the highest property tax of anywhere in the UK. These levies are added to the existing council tax, meaning second homeowners will be paying a total of 600 per cent - up to £27,863 per annum – on their properties.

The councils argue that these charges are aimed at increasing the stock of available homes at a time when there are severe shortages. The fact that Midlothian only has 35 properties liable for this tax and just two of them are chargeable for the full 600 per cent levy (the amount is determined by how long the property has been owned) indicates that this is a largely an exercise in public relations to appease voters while doing little to address the underlying housing emergency. For Midlothian it is only expected to raise £200,000 a year with the money spent on essential services.

Interestingly, this policy has already been tried elsewhere and been subsequently reversed. When Gwynedd council introduced an increased levy on second homes the local villagers in Abersoch protested. They argued that reducing the number of second homes impacted on jobs and the economy and they would rather have the financial benefits of these homeowners than have them go elsewhere. The local tradespeople, those involved in the tourism sector, and associated businesses have all experienced a substantial drop in income due to the policy. The locals took legal action against the council and won, and the policy has had to be reversed and highlights that the situation isn’t black and white and that a simplistic approach to taxation won’t work.

This is another piece of pointless policymaking which is designed to look as if something is being done to address the current housing emergency without actually doing anything about it. The notion that pricing second homeowners out of the market will resolve the housing shortage is laughable but is easier than actually doing something about the problem. A further issue is the negative signal it sends about Scotland’s attitudes to wealth and investment. The real solution is to substantially increase the volume of housebuilding in all tenures so that there are more homes available to buy, to privately rent, and in the social housing sector. Anything else is simply tinkering at the edges.