Tax rises see ownership of second homes halved

Tax rises see ownership of second homes halved
Scotland’s housing shortage easing as number of second homes drops

Middle-class Scots are abandoning their weekend boltholes, new figures show.

The number of second homes north of the border has nearly halved in last six years - potentially easing Scotland’s housing shortage.

Market watchers say higher taxes on additional properties and wider ongoing economic uncertainty have combined to dampen demand.

The total number of properties officially listed as second homes has dropped from a peak of more than 40,000 in 2012 to under 25,000 in 2018.

Susanna Clark, director of research for upmarket estate agents Strutt & Parker in Scotland, said some buyers were being cautious about forking out for a luxury like a second home.

She said: “Continued uncertainty in the market has meant people are cautious about investing in a second property with many adopting a ‘wait and see’ approach until more clarity returns to the market.

“Meanwhile, potential vendors are holding onto their assets resulting in a shortage of stock for those who are willing and keen to invest.”

Ms Clark said real high-end second homes - which Strutt and Parker often markets - continued to sell.

However, she stressed a range of factors, including new land and buildings taxes and an additional dwelling supplement were making second homes overall less appealing.

A three per cent purchase tax - the additional dwelling supplement - was imposed in 2016 on all new second and buy-to-let homes worth more than £40,000.

That would amount to £6000 on a £200,000 property and comes on top of other local tax changes.

the rise of internet short-term lets has hit both demand for - and supply of - potential second homes.

Ms Clark added: “The relative ease of letting a property for short breaks up to now made it very popular and consequently reduced the number of available residential properties in the capital and rural areas like the Highlands, putting further pressure on the stock available for sale and rent.”

Lothians Green MSP Andy Wightman has been campaigning for a “homes first” policy on housing and wants new planning rules for commercial short-term letting through platforms such as AirBnB.

He believes some people may be being more business savvy canny about their second homes so that they do not appear in statistics. Mr Wightman said: “There are new patterns of ownership and occupation under which a property can be used both as a second home for its owners and for commercial letting.”

Housing campaigners traditionally kept a close eye on numbers for second homes, mostly because they feared such ownership cut supply of properties for residents in rural areas.

However, the decline in second homes reverse mirrors the rise in empty ones, from around 25,000 in 2012 to nearly 40,000 in 2018.

The Scottish Government, through an Empty Homes Partnership administered by charity Shelter Scotland, has been trying to get more vacant houses in to use.

Shaheena Din, who manages the partnership, said: “We have found there is a close correlation between the decrease in the numbers of second homes reported and the increase in privately-owned long-term empty properties since legislation was introduced in 2014 allowing councils to double the council tax on empty homes.

“Councils have reclassified properties based on better data analysis with a view to using the Increased Council Tax Levy on empty homes – which is now used by 26 councils.

“The spirit of this legislation is to unlock empty properties and councils are encouraged to use the increased charge with discretion, where positive steps are taken to re-occupy the property.”

This, some housing insiders said, may be reflected in the big differences in trends for second home figures across Scotland.

Numbers have fallen faster for city pieds-à-terre than for weekend houses in scenic Highlands and Islands areas.

There were just over 2000 second homes in Edinburgh last year, down from a peak of 5800 in 2012. Figures also plunged in Glasgow, Aberdeen and Dundee.

The rate of decline was much lower in the Highland Council area, which now has more second homes than anywhere else. The total fell from around 4500 in 2012 to just under 3900 in 2018.

Estate agent Alan Cumming, of Aberdein Considine, said he reckoned that the additional dwelling supplement had “certainly” been a factor in falling sales of second homes, though he said concerns on the tax were easing.

But he added: “The political and economic uncertainty we’ve seen over that last couple of years will also have impacted purchase and investment decisions for many people, whether that’s moving up the property ladder or buying a second home.”

There has been rising anger over second homes - and short-term lets - across Europe. The Cornish town of St Ives in 2016 banned new-build second homes after a local referendum.

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