Councils to get new tax powers to help build affordable housing

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by a Newsnet reporter

Under proposals put forward by the Scottish Government, Scottish local authorities will receive new powers to tax privately owned houses which stand empty.  The money raised by the new tax will enable local authorities to invest in affordable housing to help ease Scotland’s housing problems.

The Council Tax on Empty Homes and Housing Support Grant Bill proposals could apply to the estimated 25,000 properties that have currently been empty for more than six months and are liable to pay council tax.  Under the plans, Scottish councils would have the discretionary power to charge owners of such properties 100% more the regular council tax.  

Under the proposals, the owner of an empty £212,000 house in Edinburgh could be liable to pay an extra £2,338 annually in council tax.  It is estimated that in Glasgow alone there are over 1800 privately owned properties which have stood empty for more than six months.

If all local authorities decided to use the maximum powers, they could raise up to £30 million per year to spend on much-needed affordable homes in Scotland.  The bill will also abolish the Housing Support Grant, which was originally established to subsidise local authorities’ housing budgets by helping pay interest on housing debts.

The extra tax on empty properties will act to encourage the owners of empty properties either to sell them or rent them out, increasing the stock of available housing and reducing the number of houses which stand unoccupied for many months.

Launching a consultation on the proposals at Ibroxholm Oval in Glasgow yesterday, Cabinet Secretary for Infrastructure and Capital Investment Alex Neil said: “Although the public purse is under huge financial strain the Scottish Government is doing all it can to increase the supply of affordable housing across the country.

“One way to do this is to tackle the problem of empty homes, which are a wasted resource and often also a blight on local communities as they attract vandalism.

“We are proposing to bring forward legislation to allow Councils to charge a Council Tax levy on homes which have been empty for more than six months.

“It will be up to each Council to decide if they want to use the new powers, which could encourage more owners to rent or sell their empty homes.”

As well as encouraging owners through the proposed Council Tax levy, the Scottish Government is working with Shelter Scotland through the Scottish Empty Homes Partnership to support Councils to work with empty home owners to encourage and help them to bring their homes back into use.

South Ayrshire Council recently secured £414,271 in funding through the Scottish Government’s Innovation Fund to run a scheme to provide loans to allow empty home owners to renovate their properties in exchange for making the properties available as affordable housing.  The towerblock at Glasgow’s Ibroxholm Oval, visited by the Cabinet Secretary, where 98 flats are currently lying empty, will now be refurbished thanks to a £1.11 million grant from the Innovation Fund.

The Government’s proposals were welcomed by COSLA – the umbrella body for Scottish local authorities.  Pat Watters, COSLA president, said:  “COSLA welcomes the Government’s recognition that councils should have flexibility to address local housing pressures and a power to vary council tax on empty properties, to a greater extent than currently, is a step which can contribute to this.”

A spokesperson for Glasgow City Council said that the council was examining the Government’s plans, adding:  “The council supports measures that will bring private properties that have been empty on a long term basis back into use.”

Graeme Brown, Director of Shelter Scotland who facilitates the government-funded Scottish Empty Homes Partnership, said: “We welcome the proposals to give councils powers to tax the owners of empty homes.  With 25,000 long-term private empty homes across Scotland, this is a step in the right direction.

“The ultimate measure of success will be the number of empty homes brought back in to use and the number of new affordable homes built using that income.  This is not a quick win.  The levy will provide several million in income for councils as part of a long term strategy.

“With 156,000 households on the waiting list, bringing empty homes back in to use can be part of the solution to addressing Scotland’s housing needs.  We urge councils to make the most of these new powers and to do all they can to utilise the houses they already have in their communities.”