Housing / Number of second and long-term empty properties decrease but concern lingers over ‘unintended consequences’
INCREASED council tax on second and long-term empty homes in Shetland appears to have helped bring some of these properties back into occupation.
But there remain concerns from some councillors that there are “unintended consequences” from the policy.
This includes suggestions that people renovating “inhabitable” homes are being “penalised” with higher council tax, and that it is unfair on folk inheriting properties.
Figures presented to councillors on Thursday showed that there were 221 second homes and 437 long-term empty properties in Shetland in 2024/25. However, in 2025/26 this had reduced to 200 and 404 respectively.
Analysis shows that around 70 per cent of the properties which left the register came back into use as main residences.
A report however added: “Avoidance tactics such as deeming properties as main residences of couples living separately are carefully scrutinised and challenged appropriately.”
In 2024/25 Shetland Islands Council began imposing additional council tax for second home and long-term empty properties.
Second homes were given an immediate 100 per cent uplift while empty homes were given a gradual increase of an additional 25 per cent a year, rising to an extra 100 per cent.
A second home is a house which is not a sole or main residence, but which is furnished and occupied for at least 25 days in any 12 month period.
If the house was not occupied for 25 days in the last 12 months, it is deemed “unoccupied”. It is considered long-term empty if it has been unoccupied for more than one year.
A study on empty homes in Shetland, published last year, showed that at five per cent of the resident housing stock there is an overall higher rate of empty homes locally than there is nationally (3.4 per cent).
It also found that empty homes are generally concentrated in areas with the least housing pressure, such the North Isles.
The report to members of the full council on Thursday said the primary intention of the council tax policy change was to bring homes back into use, and not to generate income.
Nevertheless, the additional charges brought in an additional £312,485 in 2024/25 and £429,444 in 2025/26.
It is greater in 2025/26 despite there being less properties due to the increase in the empty homes levy per year.
Councillors met on Thursday to discuss principles behind a longer-term strategy of setting council tax.
The reduction in second homes and long-term empty properties was warmly welcomed by some councillors, with Moraig Lyall for instance calling it “really, really positive” given the challenges people can have finding housing in Shetland.
Finance manager Paul Fraser also told councillors that unlike other parts of the country, 75 per cent of second homes are owned by people living locally.
But Lerwick South councillor John Fraser said he has had representation from constituents that there are “unintended consequences” of the scheme – using the example of someone hypothetically inheriting “Granny’s but-and-ben in the Westside”.
He had raised concern over the consequences of the policy when it was approved back in 2024.
Alex Armitage, who represents Shetland South, said he also has had representation from people trying to renovate a long-term empty property – something which he said is akin to doing a “service for Shetland”.
He said the policy is “penalising” them for doing so, calling it a “bit of an injustice”.
Development director Neil Grant confirmed that the council is continuing to work on getting an ‘empty homes officer’ in post with the help of national funding.
This role – mooted back in 2024 when the council tax policy was approved – is designed to help people with the challenge of bringing properties back to market.
However Paul Fraser said he struggled with the idea that the levy could be preventing people from renovating properties.
Assuming a derelict croft house could be rated at the cheapest band of council tax, he said he would doubt that this fee would impact people’s ability to renovate if they are already in a position to do up the property at significant cost.
Depute leader Gary Robinson also sought clarification on whether the SIC charges council tax on houses that are uninhabitable.
Paul Fraser responded by saying that if it has the characteristics of a building, then the assessor can put the property forward for being liable for council tax.
He added that it is fair to say that council tax is being charged on buildings that “you and I” may say are not inhabitable.
Councillor John Fraser suggested he may seek a full review of any potential unintended consequences of the policy, including direct consultation with those directly affected.
However, depute convener Bryan Peterson said it was less than two years since there was a “thorough debate” in the chamber on the topic.
He said there still remains two years of increases to the second homes levy.
John Fraser then requested a seminar where the full SIC has the opportunity to discuss an empty homes study which went in front of the development committee in November.
Convener Andrea Manson suggested it had already been through the full council, but Fraser checked with Grant – who then said it had only gone in front of the development committee.
Ultimately Fraser took chief executive Maggie Sandison’s offer of getting more information on the report from officers.
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