Second home owners on Arran hit with 100 per cent tax levy

The recently announced decision from North Ayrshire Council will affect 572 second homes - which is around 25 per cent of privately-owned homes on the island.

 

According to council tax legislation, a property is considered a second home if it is not a sole or main residence, but is furnished and lived in for 25 days or more during the previous 12 months.

 

The decision will bring North Ayrshire Council in line with 29 of Scotland’s 32 local authorities which have introduced higher council tax charges on second homes.

 

Although new powers, which enabled councils to charge up to double the full rate of council tax on second homes, came into force last year, North Ayrshire Council has only decided to implement the policy this year after extensive consultations.

 

During the consultations, 38 per cent of respondents favouring the premium levy being applied and 59 per cent were against it. More than 40 per cent of those who took the survey were second homeowners, who were most likely to be impacted by the change.

 

In a survey, those in favour of the additional levy said that second home owners raised house prices – particularly on the island communities of Arran and Cumbrae – and contributed to a lack of affordable housing, while those against it said that second homeowners made significant contributions to local economies.

 

Councillor Christina Larsen, cabinet member for finance and procurement, said: “When legislation was approved to apply a council tax levy on second homes, it was with the aim of helping to increase the availability of housing by encouraging more homes to be used for living in, rather than lying empty for long periods.

 

“We will continue to monitor how the scheme develops and consider any adjustments as necessary.

 

“Like other councils across Scotland who have already adopted this measure, we hope to see real long-term benefits to the availability of housing for people in communities across North Ayrshire.”

 

Based on the current council tax charges across bands, it is estimated that the application of a 100 per cent premium to second homes will result in additional income of approximately £1.2m a year.

 

Ten per cent of the income received from the council tax levy will be ringfenced to support investment in affordable housing throughout the whole of North Ayrshire. The additional income will be added to existing contributions from council tax on second homes, which the council says will allow for a quarter of all income generated from second homes to be directed towards investment in affordable housing.

 

Recently-purchased properties undergoing repairs or renovations, including second homes, will be eligible to receive a 50 per cent council tax discount for up to 12 months.

 

As part of its compliance with the Islands (Scotland) Act 2018 which requires local authorities to take into account island communities while carrying out its functions, an Island Communities Impact Assessments for both Arran and Cumbrae have been conducted.

 

These assessments recognise that Arran and Cumbrae will be disproportionately affected by the second home council tax levy owing to the high proportion of second homes on Arran and Cumbrae.

 

While second home ownership amounts to around one per cent on the North Ayrshire mainland, on Arran privately owned homes amount to around 25 per cent and on Cumbrae it is 43 per cent.

 

However, there are distinct differences between the two islands as 344 properties out of the 450 second home properties on Cumbrae (76 per cent) are charged council tax in either Band A or Band B. On Arran, only 118 properties from the 572 second homes (21 per cent) sit across Band A or Band B.

 

Properties across Bands A and B are generally not suitable for long-term or permanent island living and are usually smaller tenement type properties. Arran has a greater proportion of larger dwellings outwith these bands, which in terms of affordable housing, leaves Arran with significant challenges with its availability of affordable housing.