Why fleecing second home owners won't solve the housing crisis

The substantial gap in supply would remain even if every second home were to be sold, writes David J Alexander.

Second home owners in all of Scotland, and particularly in Edinburgh, are about to get a shock. From April 1 all councils can charge higher taxes for second homes and in the capital, they have decided that council tax will have a 300 per cent surcharge meaning owners will be paying 400 per cent on their property.

There are an estimated 1,440 second home owners in Edinburgh out of a total of 20,927 across the whole of Scotland. The numbers have been falling quite rapidly over the last 20 years, dropping almost 50 per cent from 39,842 in 2005, with a 10 per cent fall between 2023 and 2024 alone.

The intended aim is to discourage second home ownership with the assumption that this will release more properties into the market and so ease the housing emergency in Scotland. It is estimated that 78,000 new social and affordable homes need to be built in the next five years at a cost of £8.2 billion to simply meet the current housing needs in Scotland. Therefore, even if every second home in Scotland is sold (and it is uncertain how many of these would fall into the affordable homes category) there would still be a substantial gap in supply.

Interestingly, the estimated 38 MSPs who rent or own homes in Edinburgh will not be impacted financially because they recently increased their Edinburgh living allowance to £21,500 a year to cover the additional cost.

The problem is that this is a policy aimed at fleecing second home owners rather than increasing the supply of properties into the market. It is an ideological rather than practical idea which is succeeding in driving away people drawn to Edinburgh, as the falling numbers of second home owners proves.

The message it sends out to second home owners is questionable and makes clear that they are not welcome although their removal will do little to reduce the hundreds of thousands on the waiting list for social housing or the large numbers seeking a home in the private rented sector (PRS).

However, there are practical options for second home owners who may wish to keep a property in the capital without being penalised for this ownership. The owner could put the home into the booming PRS in Edinburgh which would mean they could earn some income from the property. They could also change the ownership of the property to someone in the family who does not already own somewhere although this would require appropriate legal advice. Or they could shift the property to the holiday let market and again generate some income.

Clearly too many second homeowners can kill communities, which is apparent in some popular holiday destinations in the north and west coast of Scotland which become deserts in the winter. But a vibrant, dynamic city like Edinburgh which welcomes people from around the world should be open to allowing people to have a property here.

The argument that this is solving the housing emergency just doesn’t wash and sends out a fairly narrow-minded message to those who want to have a connection to our wonderful global capital.