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Letters / An ill-informed decision based on little more than conjecture

I have been given occasion to scrutinise SIC proceedings by becoming a victim of them and was surprised by what was revealed. The policy of concern was that of implementing additional council tax on second and empty homes.

It is reasonable to expect that policy should be based on knowledge of the circumstances, efficacy of a proposal, adequate consultation and reasonable notice of its implementation. None of those criteria were met. [1]

The caution expressed in the meeting and the poorly supported, but very sensible, proposed amendment were welcome, as was the phased approach to implementation.

Sadly, those voting were not presented with sufficient information to make a reasoned judgement.

There was a consultant’s report commissioned by the Scottish Government Bringing empty homes back into use: audit of privately owned empty homes and published in September last year. It is available at [2].

The period covered showed a large net increase in empty homes, but some were brought back into use, partially mitigating the trend. One of the most significant findings relates to the effectiveness of empty home officers: “Some interventions have been more effective than others at delivering comparatively more outputs. The EHOs, for example, have delivered more than 98% of all empty homes brought back into use over the period under review.”

Furthermore, it is known that finance is one of the major constraints slowing the progress of refurbishments and financial support has a demonstrably positive effect. They go on to say: “The Scottish Government should review their council tax legislation to ensure the council tax premium works as an incentive to bring homes back into use and does not act as a barrier, in particular considering potential financial hardship caused, and the creation of additional financial barriers to bring homes back into use.”

Let’s hope they do so. In summary, owner engagement and advice work, as does financial assistance. Financial penalties do the opposite in many cases, and it is likely that they have a net negative effect overall.

Council to employ officer to help bring empty properties back to market

There are other data from Scotland with regard to empty properties. There have been rising numbers across a range of districts: many of the most aggressive in policy fairing the worst (Aberdeen, for example). [3] (other data linked from [4]) To quote The Herald, “The number of properties that have been unoccupied for 12 months or more across Scotland has risen on average by over 70% from 16,527 in 2014 when the crackdown was sanctioned to 28,280 in 2023”. [5]

In addition to ignoring all the available national data and reports, absolutely no evidence was presented to the council meeting that the policy changes would be effective ([1] – 55 minutes in) in either category of home and there appeared to have been no attempt at interrogating the limited local data, nor acquire any further information on the nature of ownership, property status and owner intent.

Even the most rudimentary analysis of the data that was supplied didn’t appear to have been done. The overall rate of both categories of dwelling is given as 5.64% in Appendix 2 (linked from [1]), yet was quoted as being 7% according to the local housing strategy ([1] 1:13:40 onwards. LHS is at [6] – I’ll leave aside its defects).

It is unfortunate that a definitive statistic couldn’t be established given the subject at hand.

Arguably, both figures may be misleading: it should be noted that stripping out the data for Unst, Yell, Fetlar, Foula, Papa Stour, Skerries and Fair Isle from the data in the appendix gives a rate of 4.48%. Other figures are what would be reasonable to expect. The combined figure for Lerwick is 3.06%; Gulberwick and Quarff come in at 1.21%. It shouldn’t need pointing out that forcing a home sell in Foula or Fetlar will not alleviate a shortage in Lerwick.

Indeed, the cited local housing strategy takes account of areas where people want to live, yet the policy in question does not. Naturally, there are a range of properties throughout other districts in various states of repair, refurbishment or periodic habitation: again, little is known of these because nobody has bothered to ask.

It is interesting to contrast the approach with Orkney Islands Council who implemented an empty home strategy in 2018 having hired an empty homes development officer in 2017 (part-funded by both Shelter Scotland and Highlands and Islands Enterprise) [7].

Owners were surveyed, with a decent participation rate, enabling at least some understanding of the situation to inform the policy and approach. The initial activity of the officer was hailed as a success, bringing 18 properties into use. Note that this was BEFORE any financial penalties were introduced (100% surcharge for properties vacant for 12 months since October 2019).

Subsequent data is mixed and inconsistent. The document linked in [7] quotes 759 as the total of second and empty homes, whilst the data linked from [3] quotes 721 for 2017. The most recent corresponding figure for 2023 is 726, having spiked to 774 in the previous year, in other words, it has gone up. The “long term empty” tab in that spreadsheet shows significant fluctuation with 303 when the financial penalty was introduced and 252 in 2023.

There is an obvious probability of migration from a category that was financially penalised to one that wasn’t, as evidenced by the total figure. It is reasonable to conclude that there has been, at best, a marginal impact. It is conceivable that the number actually made available to be long term homes may be in single figures after several years, or could even be negative.

It would be useful if clarity could be obtained from our neighbours, as raw statistics seldom tell the full story. Whether marginally effective or completely ineffective, theirs does seem to be a far more appropriate and rational approach to governance.

In Wales, the power to impose additional charges on both second homes and empty properties has existed since 2017. Across different counties, varying policies have applied and results have been mixed.

In some districts, second home numbers have risen regardless, whilst in others there have been a reduction in both categories but those are dwarfed by the growth of furnished holiday lets, which seems to be the most common migration path for afflicted homes. The situation is reasonably well summarised at [8]. See figure 6 for furnished holiday lets – but take into account the subsequent caveats.

The perspective of the Bevan Foundation is an interesting read at [9] “In May 2022 there were 21,718 listings on Airbnb in Wales, up from 13,800 in 2018”.

The policy aim of freeing up properties to be long term homes has utterly failed and the headline statistics are very misleading. In response, the Welsh Assembly has modified the criteria to meet the definition of a holiday let to curb abuse [10] so it’ll be interesting to see how it plays out as meeting the new criteria of achieving letting for half the year may prove challenging for genuine businesses [11]. In addition, the advocates of failing policies are doing what such people often do and are doubling down on them with even higher tax rates. If a 100% penalty was actually effective, multiple hundreds of percent wouldn’t be emerging as the new normal.

It was observed that, in the council meeting, there was practically no discussion of whether it was appropriate to impose additional tax on the category of second homes, as if this was an indisputable good. Besides the obvious moral question of whether it is appropriate to charge double taxation on those who use council services the least, the effectiveness of that policy in achieving its claimed aim (of freeing up property for use as long term homes) is doubtful at best.

Mercifully, and largely the result of luck, my own home in Shetland is not classed as a second home as it is only occupied for around three weeks annually and is therefore “empty” (the distinction between the two categories is whether under 25 days annual occupation).

It is off the table for selling or letting as it’s the only home that I own, and I don’t intend to render myself homeless for my imminent retirement. How many homes of both categories are in a similar situation?

Referencing a Scottish Government consultation on the law enabling this policy change does not constitute evidence of consultation on the policy being applied within Shetland. Pretending that those afflicted have been adequately consulted is preposterous. Besides its inherent inaccuracy, at least some amongst us had a misplaced faith that the SIC would proceed sensibly and cautiously. That unfortunate complacency is at an end.

Unforeseen and unintended consequences were mentioned several times during the meeting. Those may prove to be troublesome but even the foreseeable consequences aren’t attractive:

It would seem reasonable to anticipate that those at the margins of habitation duration may modify their home use to staying for less than 25 days annually, thus migrating their homes between categories and saving money but reducing spend in the local economy and interaction with the community.

Those renovating homes at a slow rate due to financial constraints will be further impeded in progress.

Some marginal homes may be bulldozed to save money, thus destroying future potential for renovation (but removing them from the statistics, which may be misrepresented as some kind of win). In many instances, the cost of adequate restoration may exceed the market value.

Considerable bitterness will be engendered amongst the victims (or “losers” as termed in the chamber), mostly due to the way this has been implemented and lack of evidence to underpin the decision, taken at a time when the Scottish Government’s own commissioned report advocates a policy review. It’s hard to accept financial penalties when they have been imposed without consultation or adequate notice, consequent to an ill-informed decision based on little more than conjecture.

There will be an instinct for ever more draconian and extortionate interventions. Wales will be a fascinating case study from which others should seek to learn as things unfold.

In the UK as a whole, not enough homes are being built and that’s been the case for decades. Even if every second or empty home became instantly available, it would be a temporary respite for a few rather than an actual solution to the problem. At some point, more accommodative planning policies will have to come into effect but we will have to endure considerable collateral damage in the meantime.

Perhaps other avenues require exploration too? Does, for example, respecting the property rights of an unwilling landowner where hundreds of houses could be built trump those of hundreds of owners of homes which are mostly in areas where people don’t want to settle?

I don’t know but the logic is far more compelling. We need leaders, both local and national, who are willing to fully confront the situation rather than distract from it with policies that are, at best, demonstrably marginal in positive effect (if not net negative) and onerous to many.

Magnus Williamson
Newbury

Notes: 

[1] https://shetland.public-i.tv/core/portal/webcast_interactive/842699
The link to “Resources” gives Appendix 1&2 as well as the final document

[2] https://www.gov.scot/publications/bringing-empty-homes-back-use-audit-privately-owned-empty-homes-scotland/

[3] https://www.gov.scot/publications/housing-statistics-empty-properties-and-second-homes/

[4] https://www.gov.scot/collections/housing-statistics/
Direct links to the data are lengthy URLs within officeapps so there’s a little clicking required

[5] https://www.heraldscotland.com/news/23998290.number-long-term-empty-homes-skyrockets-despite-scotgov-crackdown/

[6] https://www.shetland.gov.uk/downloads/file/6407/lhs-strategy

[7] https://www.orkney.gov.uk/Files/Housing/Housing%20Options/Empty_Homes_Strategy_Fund.pdf

[8] https://www.gov.wales/second-homes-what-does-data-tell-us-html

[9] https://www.bevanfoundation.org/resources/holiday-lets-and-the-prs/

[10] https://www.walesonline.co.uk/news/wales-news/how-wales-holiday-rules-crack-26508922

[11] https://www.business-live.co.uk/economic-development/warning-new-rules-holiday-lets-23410878 

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