SPICe regularly receives enquiries asking for information on council tax, in particular whether council tax has to be paid on empty properties, uninhabitable property or second homes.
Local authority powers
Local authorities are responsible for implementing all council tax exemptions and discounts for unoccupied properties and second homes, and additional charges for long-term unoccupied properties.
Local authorities have wide discretionary powers when applying the discounts and additional charges. Therefore, policies will vary between local authorities.
This blog provides a broad overview of the legislation regarding council tax exemptions and discounts and increased charges for unoccupied properties, highlighting where local authorities can use their discretion.
The legislation in this area is complicated. We advise constituents to check with the relevant local authority for specific details of their policy.
Council tax exemptions
The Council Tax (Exempt Dwellings) (Scotland) Order 1997 provides that in some cases, unoccupied properties are exempt from council tax. These include, for example, properties where the owner is in long term residential care, in hospital or in prison.
There are also some time limited exemptions, including for:
Unoccupied properties undergoing (or have undergone) major repair works or structural alteration. An exemption is provided for 12 months since the property was last occupied. No more than six months exemption can be awarded since the major repair work or structural alteration in question was substantially completed. The exemption applies to the property, regardless of any change of ownership. If the exemption has expired when a property is bought, the new owner may be eligible for a council tax discount (see below).
Unoccupied and unfurnished properties. An exemption is provided for 6 months. The start of the 6 months is calculated from the end of the last period that the property was continually occupied for three months.
Local authorities do not have discretionary powers under the 1997 Order.
Council tax discounts and increased charges
The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 sets the rules regarding discretionary variation in council tax for unoccupied dwellings and second homes.
The Scottish Government published guidance on second homes and long term empty properties in 2013 which sets out the broad framework for the application of local authorities’ discretionary powers.
For council tax purposes, a second home is a property which is no-one’s main residence but which is furnished and occupied for at least 25 days in any twelve- month period.
Each local authority has discretion to apply a council tax discount of between 10% and 50% on second homes. Since April 2017, local authorities have also been able to choose to apply no discount.
Local authorities have flexibility as to how the discount, or removal of the discount, applies. For example, different discounts could be charged according to the area the second home is situated in.
Purpose-built holiday homes, that are used for holiday purposes, and are restricted from being used all year round, must have a 50% discount applied.
Qualifying job-related dwellings must also have a 50% discount applied.
An unoccupied dwelling is one that is no-one’s main residence but is not a second home (as defined above).
- Unoccupied for less than 12 months: local authorities must offer a council tax discount of between 10% and 50%. If the property is unfurnished then, as noted above, an exemption for the first 6 month applies.
- Unoccupied for more than 12 months: local authorities can offer a council tax discount of up to 50% or can impose a surcharge of up to 100% of the relevant council tax rate, i.e. the owner would pay up to double the normal council tax.
However, local authorities cannot increase the council tax for empty properties that are being actively marketed for sale or for let until the property has been empty for 24 months. Owners of such properties still pay council tax during that period, but at the level of discount set by the local authority.
The Scottish Government’s reason for giving councils the power to remove the discount or increase the council tax for long-term empty properties was:
“…to help local authorities to encourage owners to bring empty properties back into use, both to increase the supply of housing for those who need homes and to reduce the blight on communities caused by houses being left empty and allowed to fall into disrepair.”
The supplementary guidance on ‘Council tax on second and long-term unoccupied homes’, published in April 2018, emphasises the flexibility that local authorities have when determining how the discretionary variation in council tax is applied when setting their policy.
In particular, the guidance states that the legislation:
“.. allows a local authority, should it so choose, to take the circumstances of individual owners into account when e.g. applying an increase. This flexibility was included so that local authorities can modify provision by not charging a council tax increase, charging a reduced level of increase or offering a higher level of discount, though this is subject to the limits in the Regulations and exemptions from council tax. It allows a local authority to avoid charging a council tax increase (or charge a lower level of council tax than for other unoccupied dwellings) where it considers there are reasons why the owner is justified in leaving the dwelling unoccupied and/or reasons why the dwelling could not be lived in, sold or let.”
The Scottish Government also funds Shelter Scotland to develop and deliver the Scottish Empty Homes Partnership. The partnership gives advice to home owners and supports a network of empty homes officers working in local authorities who can provide support for home owners liable to pay any surcharge which has increased their council tax bill.
Local authorities can use the revenue raised to fund empty homes work in their area.
- Unoccupied dwellings which subsequently undergo extensive repair following purchase: New owners of empty properties that are undergoing, or require major work, to make them habitable are entitled to a 50% council tax discount for up to 6 months.
Local authority council tax policies
A recent BBC news article suggests that 26 local authorities charge extra council tax for long term empty properties.
Statistics, published by the Scottish Government, states that in 2017/18, 14 out of the 32 councils had removed the council tax discount on second homes. The remaining 18 councils had opted for a 10% discount on second homes.
If someone owns a home that is available as a holiday let for 140 days or more a year, they should contact their local Scottish Assessor for classification as a non-domestic, self-catering, property which will then become liable for non-domestic rates, rather than council tax. This currently applies regardless of how many days a property is actually let.
The actual non-domestic rates which apply will depend on the rateable value of the property and the apportionment factor if the property is partly domestic and partly non-domestic, as determined by the relevant local Scottish Assessor. The domestic part of the property will continue to be liable for council tax.
Gwynneth Cowley, Enquiries Manager
Kate Berry, Senior Researcher