Highland Council unveils council tax second homes plan

Highland Council leader Raymond Bremner wrote to the Depute First Minister, John Swinney, asking for permission to repurpose this income over the next two years as it negotiates its biggest ever funding shortfall and his request was approved.

The local authority is forecasting a budget deficit of £126.9m over the next five years and say the largest element of this gap (£49.2m) falls in the coming year and will require “substantial transformative activity”. 

Mr Bremner said people in the Highlands were facing some of the highest rises in the cost of living. A 4%  uplift in council tax was agreed at yesterday’s budget meeting, one of the lowest in Scotland.

He said a “lack of clarity” from the Scottish Government over flexibilities in ring-fenced funding was “confounding the perfect storm of inflation at the highest levels, rising interest rates and a cost of living crisis”.

The move to re-direct council tax revenue from second homes is expected to generate £3.4m annually.

SNP leadership candidate Humza Yousaf said earlier this week that he would back increasing council tax on second homes to encourage them back into full-time use by owners.

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The council insists the temporary measure would not impact on the delivery of affordable housing and have been agreed in previous years by the Scottish Government.

However, it comes amid warnings that a shortage of affordable homes in the Highlands and Islands is driving workers away and hampering growth in lucrative industries, as well as pricing local people out of the market.

Salmon Scotland, the trade body for Scotland’s farm-raised sector which sustains 12,500 local jobs and brings in nearly £800m a year for the economy, warned last week that housing shortages are holding back “real growth”.

Farming companies already provide accommodation for 130 employees and their families after buying or renting suitable housing, but many workers simply cannot find homes near where they work.

Shelter Scotland said it is concerned about “chronically underfunded local authority housing services” given the cuts to social housing funding in the recent budget.

READ MORE: Highlands and Islands housing crisis hampering economic growth

Registers of Scotland data shows that while average prices across Scotland rose by 89 per cent in 2022 compared to the 2004 baseline, the increase was  107% in the Highlands. 

The average price of a home has gone from £108,106 in 2004 to £223,196 in 2022.

There are concerns that a high concentration of second homes can increase house prices, reducing supply for local people. 

However, research by independent think tank SPICe (Scottish Parliament Information Centre) found there may be some benefits. Second homeowners tend to be wealthier than those that don’t own second homes and if they regularly spend money in the local area this may benefit local businesses. 

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Second homes used as holiday lets can also be crucial to support local tourist economies.

Highland Council said the Scottish Government was becoming “increasingly directive” in how the local authority deploys its funds.

The council is investing an extra £20m on road repairs and a rapid response service for pothole repairs while payments to kinship and foster carers will be increased “to keep Highland children in the Highlands”.

However, cuts to a number of charitable groups were criticised by opposition councillors, in particular the loss of £65,000 for SNAP (Special Needs Action Project) in Inverness and a £9,000 drop in funding for Lochaber Music School, which has been operating for 36 years. 

Previous alumni have gone on to play with the RSNO, Scottish Opera and Scottish Ballet.

Angus MacDonald, Liberal Democrat Councillor, said people were drawn to the Highlands because of “ beauty of our scenery, the charm of our people and culture and traditions.” and reductions in funding for groups such as this threatened to erode this.

Mr Bremner said: “We are facing a perfect storm of circumstances with inflation at the highest levels, rising interest rates and a cost of living crisis. 

"This is confounded by uncertainty around future pressures and risks and a lack of clarity on ring-fenced funding.

“In setting this budget, we have tried to be fair. 

“We have focused on removing duplication and over-provision and making sure our services are affordable.

He added: “We have carefully considered where we target our spending and have chosen to invest in improving our roads, reducing our waste, supporting children and families, and protecting jobs.”