Scottish holiday let owners to face tax hikes under new proposals to curb second home ownership

The Scottish Greens hope their amendments will mean more homes are used to tackle Scotland’s homelessness crisis.

Holiday let owners in Scotland could face new tax hikes under proposals to clamp down on numbers.

Scottish Green MSP Ross Greer has tabled plans to ban tax breaks and introduce additional charges on short-term lets, which he says allow landlords to profiteer from houses which should be being used to tackle Scotland’s homelessness crisis.

His amendments to the Housing (Scotland) Bill would stop holiday let operators from receiving non-domestic rates relief and give government ministers the power to charge owners an additional non-domestic rate instead.

The amendments would see more taxes for holiday let owners. | National World

The Greens say short-term let operators typically enjoy up to 100 per cent non-domestic rates relief through policies such as the small business bonus scheme.

Speaking to The Scotsman, Mr Greer said: “There are communities across the country where the greed of short-term let operators and buy-to-let landlords has destroyed the chance of local young people ever owning their own home.

“Given the damage they’ve done to the housing market, there is absolutely no need for short-term let operators to continue receiving massive tax breaks. Instead, they should pay a bit more in tax to fund the extra affordable housing we need to solve the crisis they helped to cause.”

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He says the reforms will discourage people from buying up homes in popular tourist spots and turning them into holiday lets, and encourage landlords to sell their second homes to be used for affordable housing instead.

Since the previous election, Mr Greer’s party has helped to double the tax paid when buying a holiday home and given councils the power to double council tax on holiday homes.

There were 2,455 fewer second homes bought last year compared to 2023 - something the Greens say shows these reforms are having the “desired effect”.

Green MSP Ross Greer | Press Association

Mr Greer said: “The changes already delivered by Green MSPs have reduced the number of second and holiday homes bought each year, freeing up more properties for people who need a home to live in and raising millions of pounds for vital services like schools and hospitals.

“We will continue cracking down on the rich hoarding homes and working to free up houses for people to actually live in. We have thousands of homeless people across Scotland while many homes are bought up and used as Airbnbs.

“The Scottish Greens believe housing should be for people and not for profit.”

However, Mr Greer’s proposals have been criticised as “cynical ploy” and of “mischaracterising” the housing crisis in Scotland.

Fiona Campbell, chief executive of the Association of Scottish Self-Caterers, said: “Raising false hopes about tackling homelessness by hitting Scotland’s tourism sector is a cynical ploy, which ignores the reality of Scotland’s housing crisis.

“Effective housing policy should be data-led, not driven by ideological soundbites and a tedious anti-business agenda.

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers. Pic: Contributed

“Mr Greer conflates fundamentally distinct categories of property use, namely second homes and professionally operated self-catering units. This repeated mischaracterisation flies in the face of all the evidence and undermines a vital part of Scotland’s visitor economy.”

Ms Campbell said self-catering properties make up 0.8 per cent of Scotland’s housing stock, compared to 0.9 per cent for second homes and 3.4 per cent for empty homes. She said holiday let owners were “not wealthy individuals hoarding homes”, but regulated businesses which help support local economies.

“Rather than scapegoating Scotland’s £1 billion self-catering industry, who already pay licensing fees and non-domestic rates, policy should instead focus on real solutions - repurposing the 92,000-plus long-term empty homes across Scotland and accelerating the construction of genuinely affordable housing,” she said.

“We’ve got to build our way out of this crisis, not destroy small businesses.”

This comes as the Scottish Government launches a consultation on the Housing (Scotland) Bill, specifically looking at proposed exemptions from rent controls and rent increases above the rent cap. Last year the Government set out its plans for long-term rent controls in the Bill to create better regulation in the private rented sector.

Social Justice Secretary Shirley-Anne Somerville said: “Our rent control proposals will help provide certainty for tenants by keeping them in their homes and ensure rents remain affordable during a cost-of-living crisis.

“Rental properties are a crucial element of our efforts to tackle the housing emergency and we want landlords to have the confidence to invest and continue to provide good quality, affordable homes.

Social Justice Secretary Shirley-Anne Somerville speaks to MSPs on the Scottish Government's response to the Supreme Court ruling on the definition of a woman under equalities law, in the Scottish Parliament at Holyrood. Picture: Jane Barlow/PA Wire | Jane Barlow/Press Association

“The responses [to the consultation] will help us strike the right balance between supporting tenants, whilst ensuring the rights of landlords are protected and we continue to support investment in the rented homes we need.”

Holyrood’s local government, housing and planning committee is due to debate stage two of the Housing Bill on Tuesday next week where a number of amendments will be considered. This includes adopting an inflation and capped rent control mechanism and regulations for exemptions to rent controls.

Liberal Democrats MSP Willie Rennie has also proposed the ‘between tenancies provision’ be removed. This provision means rent controls will be extended to properties that are between tenancies.

The Scottish Property Federation said it was concerned about this provision as well as it being a “red line” for many investors.

The organisation is worried the move will drive landlords from the market and deter new, large-scale investors from entering the Scottish sector as it does not account for situations where landlords have not increased their rent for a number of years and are now seeking to invest or upgrade their properties.

The committee will also consider proposals to better protect student renters from the Scottish Conservatives. Tory MSP Graham Simpson wants to see rent controls extended to student lets, and fellow MSP Edward Mountain wants students to be able to challenge rent increases.

The Scottish Property Federation said the fundamental issue at the heart of the Bill was a “critical” lack of housing in Scotland, and that this imbalance was leading to increased rents and additional costs such as mortgage interest, wages, energy and repair costs.