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Publication - Impact assessment

Non-domestic rates/Council Tax second and empty homes consultation: business and regulatory impact assessment

Published
17 April 2023
From
Minister for Community Wealth and Public Finance
Directorate
Local Government and Housing Directorate
Part of
Business, industry and innovation, Communities and third sector, Economy, +3 more … Farming and rural, Housing, Money and tax
ISBN
9781805257103

Business and regulatory impact assessment (BRIA) relating to the consultation on council tax for second and empty homes, and thresholds for non-domestic rates.

View supporting documents Supporting documents

Summary and recommendation

Table 8: Summary costs and benefits table
Option

Total benefit per annum: - economic, environmental, social

Total cost per annum: - economic, environmental, social - policy and administrative
1
  • While the majority of self-catering accommodation receives 100% relief on non-domestic rates and pays no local tax, the local economy may benefit in other ways. For example, through the employment of local cleaning and laundry services, spend in local shops hospitality and visitor attraction venues from guests staying in the accommodation.
  • Second homes used as self-catering accommodation and let for more than 70 days and available to let for 140 days each financial year, would remain eligible for non-domestic rates. Most qualify for up to 100% Small Business Bonus Scheme relief, and therefore continue to pay no or very little local tax.
  • Two thirds of lettings on AirBnB were for usage under 90 days (2019 AirBnB). Nearly the same percentage of bookings on AirBnB were for secondary lettings.
  • Doing nothing means local areas cannot use taxation as a means to incentivise homes to be used more often.
2
  • This option might incentivise some second home owners to change the use of their accommodation. This would most likely be to let it as self-catering accommodation for more than 70 days each financial year. This might result in the home being used more often and the local economy benefiting from increased spend.
  • This would be offset, however, by lower council tax revenue if the accommodation paid non-domestic rates and qualified for SBBS.
  • This would also mean less revenue ringfenced for affordable housing.
3
  • A higher premium is more likely to influence owners to change the way they use second and empty homes, with the resulting benefits and risks depending on what choice they make.
  • There is no guarantee that homes which are sold will be used differently by the new owner but higher premiums ultimately mean more revenue for local areas.
  • As option 2
4
  • Councils could use discretionary powers to alter the actual days let threshold for non-domestic rates to better reflect local need and circumstance.
  • Second home owners may be more likely to use the accommodation as a private rental tenancy. This would provide more local housing occupied for more of the year, with social, environmental and economic benefits.
  • Local economies could be unduly affected if councils miscalculated the local impact from reduced levels of self-catering accommodation to related businesses e.g. laundry and cleaning services.

Contact

Email: secondandemptyhomes@gov.scot

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