Chamber and committees

:I think that it is fair, and a number of safeguards are built in. I mentioned some of those in my opening statement. We are ensuring that existing statutory exemptions and discounts remain in place—for example, where a property is empty because someone is in hospital or receiving care, the exemption will continue to apply. There is also a mandatory 50 per cent discount for job-related dwellings and purpose-built holiday homes—that is unchanged. As I said, there is a six-month grace period for new owners where repairs or renovations are being undertaken. In addition, councils must have regard to the statutory guidance when they are exercising these powers so as to take into account situations such as where a property is unoccupied because a person is serving in the armed forces or is deployed away from home and working in the national health service.

There are a lot of safeguards in place. Ultimately, however, Parliament has decided—rightly—to take forward the policy, after hearing for some time all the representations that have been made and the issues that have been raised by members across the parties regarding, in particular areas, a loss of property to second homes and the number of empty homes that could be brought back into use when people are desperate for rental properties in areas where they want to remain. It is all about balance, but I think that it is right to have a policy objective of trying to do something about that.

Nonetheless, it has to be approached in a proportionate way, which is why it is right to give individual local authorities the powers to make these decisions. The approaches that would work and the issues that exist in your area, Mr Coffey, will be quite different from those in the Highlands and Islands, where high numbers of properties have been lost to second homes. That is why it is right to empower local authorities to do the right thing in their area.

:I will bring in Fiona Hepburn on that. That is where the guidance will be important, because it will need to look at, and be flexible enough to take into account, local circumstances. I think that you are referring to situations involving seasonal workers, for example, where properties will be used only at certain times of the year. I would expect that the guidance would enable that flexibility. Fiona, do you want to come in?

10:00

:It will be done through the intelligence that local authorities provide. Given that the regulations empower them to take local decisions according to their local housing markets and local policy, each local authority could go down a different route, if they go down the route at all. It is entirely up to them, but we would want to monitor the impact of a particular local authority’s policy.

The financial memorandum that is provided used an estimate that, if every council applied a 100 per cent premium across second homes and long-term empty homes, it could raise between £50 million and £70 million but, of course, every local authority might not do that and there could be variation between local authorities. Also, that estimate assumes full uptake and no behavioural change. Therefore, we will have to monitor the impact in real time. We will then get a picture of different policies across local authorities and will be able to consider the success and impact of those policies and the policy variation across the 32 local authorities. James, do you have anything to add?

:I do not accept the characterisation of the Government as disincentivising the private rented sector. There is a very healthy private rented sector in Scotland, in which growth continues, and there is renewed interest from major investors in areas such as mid-market rent and build to rent. Those will be important components of the expansion of affordable housing. Of the £4.9 billion of investment over the piece, £800 million will be from private investors. There is a lot of interest from that market. I therefore do not accept that characterisation.

We want to see horses for courses. There is not the same pressure around second homes in some areas of Scotland, and local authorities will want to look at their own housing markets. In other areas, however, there is huge pressure around second homes, with local and young people unable to remain in those areas because they cannot access a property, whether to purchase or to rent.

We want to empower local authorities to create their own regulatory environments that will suit the needs of their areas. We are not taking a one-size-fits-all approach.

In addition, we have taken action on empty homes through funding the Scottish Empty Homes Partnership. It has received an investment of about £5.7 million since 2010 and has helped to bring almost 13,000 homes back into use. In 2024-25, a record number of privately owned empty homes—more than 2,000—were returned to active use, which was 10 per cent more than in the previous year.

We want to work with owners of second properties, because we do not want them to sit empty. We are trying, across a range of policy areas, to encourage those homes to be brought back into use, because that will benefit everybody.

However, I emphasise that it is not a one-size-fits-all approach. We want to empower local authorities to use their powers in a constructive way.

:I should add that it will be possible for local authorities to introduce the change in-year, if they so wish. There is not an issue of not introducing it because of the overlap; it would be difficult for them to have the change in place for the start of the year, given the timing of the housing legislation and then the regulations. However, it can be introduced in-year if local authorities so wish.

:If someone is upgrading a property, they will have a six-month grace period from paying the premium.

:It would be a standard appeal. I think that James Messis is making a point about what happens if it looks as though a council may be misusing the policy—that may be too pejorative—across the council area, or if it is having unintended consequences but the council is not recognising that.

I do not foresee that happening, because it would be counterproductive. However, for individuals, the normal appeals mechanisms will be there, plus the guidance will set out the specific situations where there should be an understanding—I mentioned, for example, the armed forces, people working in the health service and so on.

:I can share some figures with you from a period of time. In 2012, the number of second homes peaked at 40,599. Between 2019 and 2023 it remained stable, and then it dropped by 10 per cent in 2024. That was the biggest annual decrease in 10 years. The decrease between 2023 and 2024 is likely related to the 100 per cent council tax premium on second homes, which came into effect in April 2024. That was followed by a decrease of 3 per cent between 2024 and 2025. There is some evidence that the premium has had an impact, but it is important to monitor it. James Messis will confirm that we will monitor the impact of local authorities’ use of those powers.

I take the point. However, I refer the member and the committee to the array of other information that predates and sits alongside the budget or will come after it. For example, the material that was published in June in the fiscal sustainability delivery plan is critical. It is absolutely right that we are held to account for the delivery of that plan, but it sets out a very ambitious programme of transformation and efficiency that is absolutely going to reduce costs. I think that, in many ways, that is what you are getting at—what is the other side of the envelope?

I merely say to you that at no point have you come to me and said, “I think that local government needs another £250 million and it should be taken from A, B or C.” When it comes down to the brass tacks of how much money is available and where it comes from, it can only come from other areas of spend.

You have talked in fairly general, vague terms about social security spend, but you know as well as I do that, to adjust any social security spend, legislation would have to go through in this Parliament to adjust entitlements, and we would be a year down the line before we could do any of that, even if we wanted to. The budgets have to be in place for 1 April. The choice that I have—and the choice that you would have—involves the fact that the £200 million, £250 million or however much more you think that local government should get would have to come from, for example, higher and further education, the health budget or other front-line services. Those are the only places where it could come from in time for 1 April.

We have to be honest about what we are saying. If you truly believe that there is not enough money for local government, you could have made more money for it a condition of your support for the budget and told me where you thought that it should come from. However, you have not done that.

I am afraid that those are the choices that have to be made when you are sitting in my seat, and those are the choices that I have made.

Amendment 1 agreed to.

Amendments 2 to 5 moved—[Shona Robison]—and agreed to.

Schedule 1, as amended, agreed to.

Section 2 agreed to.

Schedule 2—Direct-funded bodies