Pt.3 - One for everyone before seconds for anyone

This is the last of the three-part summary on my efforts to tackle the housing crisis by overhauling Scotland’s rigged tax system. Here I’ll cover the solutions to the problem of holiday homes and short term lets driving rural and island communities to collapse, plus how we make big housing developers pay towards the public infrastructure needed by communities.

One for everyone before seconds for anyone

In Coigach in Wester Ross half of the houses sit empty for most of the year, or are occupied for just a few days at a time because they are either second homes or holiday lets. It’s a similar story in Lochranza on Arran, which I represent in Parliament and where the figure is about 40%. Urban communities like Edinburgh’s Old Town are also badly affected.

Young people cannot find a home in the communities they’ve grown up in, so they move away. This is an existential threat to our island and remote communities in particular. When the number of families dwindles, schools close. Once that happens it is near impossible to attract new families into the area to reverse the trend.

Green MSPs have already given councils the power to double Council Tax on second/holiday homes, leading to 2455 fewer second homes across Scotland last year - meaning those properties were available for people to live in full-time. That isn’t enough though. Wales faces many of the same challenges and they’ve empowered councils to charge up to 300% of the normal rate. So, I'm moving that we lift the cap entirely and let councils charge as high a rate of Council Tax as they need to in order to encourage holiday home owners to sell up. This will free up homes for local people to live in and safeguard the future of rural & island communities.

I also intend to build on our success in doubling the tax paid when buying a property the owner won’t actually live in, i.e. a holiday home, short term let, rental property etc. Specifically, I’m proposing that we also set it at a higher rate in areas where the housing crisis is particularly bad - our National Parks and in the new Rent Control Zones which this Housing Bill will establish. 

That tax, the Additional Dwelling Supplement (ADS), is currently 8% everywhere in Scotland, but Loch Lomond and the Trossachs national Park has five times as many second homes as the national average and Cairngorms more than ten times, clearly justifying a more targeted approach. Doubling this purchase tax to 16% in both parks would seem like a good place to start.

After all, why should wealthier people get the privilege of a second home when it comes at the expense of those who can’t even get their first?

Build communities, not just houses

The New Towns of the post-war era, like East Kilbride and Livingston, were supposed to deliver a whole new quality of life for those (like my family) who had grown up in often poor quality or dangerous urban tenements. Amazingly enough though, just building thousands of houses without the other infrastructure needed to make successful communities, did not work.

Even with this clear lesson from our recent history, councils which cannot afford to build and operate new schools, community centres or public transport links are under huge pressure to approve new housing developments.

The existing system of essentially voluntary developer contributions from developers does not work. That is especially true for smaller councils without the in-house capacity and legal expertise to secure and then pursue such agreements. 

In 2019 MSPs created a new ‘Infrastructure Levy’ power, effectively a tax on housing developers whose proceeds would fund at least some of the infrastructure their estates would need.

Unfortunately, after intense lobbying by those same developers, the Scottish Government announced last year that it wouldn’t activate the Infrastructure Levy. Instead, it plans to let the power expire when its sunset clause is triggered next summer.

My amendment would remove the sunset clause, giving the Parliament and Government elected in May 2026 the opportunity to bring in this clearly much needed levy and fund the infrastructure any community needs to thrive.

Taken together, this is the most comprehensive package of property tax reforms put forward since the Scottish Parliament was (re)established. If passed it would be a huge change to our tax and housing systems, both redistributing hundreds of millions of pounds from the richest in our society to those who need it most and freeing up thousands of homes to tackle this crisis.

Those lobbying against change have deep pockets and a lot of influence though. I’m confident that a few of my proposals will go through, but most will be fiercely opposed and external pressure on the Scottish Government and MSPs of all parties will be essential if we’re to make progress. 

If you agree with me that this is the time for transformational change, join our movement today.

Photo: Lochranza Pier by Andy Farrington, used under Creative Commons Attribution-Share Alike 2.0