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The Herald Scotland
24-04-2025
- Business
- The Herald Scotland
Second home owners 'not to blame' for housing shortages
Ross Greer, the party's finance spokesman, and a west of Scotland MSP, has tabled amendments to the Housing Bill which is going through Holyrood to create the new zones. Currently, someone buying a holiday home anywhere in Scotland must pay a levy known as the Additional Dwelling Supplement (ADS), at the moment set at 8% of the property's value. It is an additional charge which is added to any Land and Buildings Transaction Tax (LBTT) due on the house purchase. The Scottish Greens want ministers to be able to raise the ADS rate to 16% in the areas where there is a housing shortage arguing it could stop property prices from rising so much that local buyers are priced out of the market. At present, this tax can only be increased or decreased nationwide, with targeted changes not possible. READ MORE: Second homes tax could double in Scotland's tourist hot spots SNP tell Sarwar to back Scottish visa to boost economy and population Call to cut the number of Scottish health boards from 14 to three But David Melhuish, director of the Scottish Property Federation, disputed the Greens argument. He said second home owners were not "mainly to blame" adding an insufficient number of homes were being built. "The success of the increased council tax and LBTT for second homeowners has been mixed to date. The evidence suggests there have been reductions in the number of second homes by around 10% in the past decade or so, as taxes on second homes have increased and we would expect a further significant increase in LBTT on second homes would add to this trend," he told The Herald. "This might not significantly improve the availability of homes for communities however, as affordability will still be a challenge due to the sheer volume of demand for homes. "While we understand the temptation to highlight second homeowners as an issue, we do not think they are mainly to blame. The bigger problem across Scotland remains that the delivery of new homes of any tenure, including affordable or mid-market rent, has simply not been sufficient to meet demand." READ MORE: MP calls for coherent oil and gas plan, warning of a 'Grangemouth-a-week' Scots firms 'going bust amid rising costs and weaker demand' Scottish peer leads campaign to stop Donald Trump addressing Parliament Mr Melhuish spoke out as the Scottish Government launched a consultation on Wednesday on exemptions from the upcoming rent controls system in Scotland. Under the consultation new build rental homes would be exempt from rent controls. "The evidence we published this week shows a 0% increase in new planning applications for build to rent homes in Scotland in the past year," he said. "In our view this is due to the chilling effect of the rent control debate on new investment proposals. We must therefore boost supply and proposals to exempt new build rental homes from rent controls are therefore welcome." Mr Greer responded: 'Sky high rents and house prices are pricing far too many people out of the communities they've grown up in. "One of the key drivers of this housing crisis in rural areas in particular is the staggering level of second home ownership in some of these communities. 'It is vital that we build more affordable homes. One obvious way to do that is by using increased tax receipts from the generally wealthy owners of second and holiday to fund more social housing. 'The recent fall in holiday home sales is a sign that tax changes already secured by the Scottish Greens are doing exactly what we intended. "By setting a higher rate in the areas where this crisis is worst, we can raise vital funds and increase the number of homes available for people who will actually live in them.' The ADS is charged if some buys an additional residential property in Scotland including a second home, a rental property or a holiday home. Since the 2021 election the Scottish Government has doubled the ADS from 4% to 8% and given councils the power to double council tax on holiday homes after coming under pressure from the Scottish Greens. The Greens say the reforms have reduced the sale of holiday home purchases, with 2455 fewer second homes bought last year than in 2023, the largest decrease in a decade. The supplement will also raise more than a quarter of a billion pounds for public services in the current financial year, according to the party. Thirteen of Scotland's 32 councils have declared a housing emergency, beginning with Argyll and Bute Council in June 2023, with the most recent being East Lothian Council in November last year. A national housing emergency was announced by the Scottish Government for the whole country in May 2024. The Greens' proposals on the ADS are among a total of 447 amendments to the Housing Bill which will begin to be debated next Tuesday by MSPs on Holyrood's local government, housing and planning committee. The legislation will be voted on later at its final parliamentary stage - stage three - in the Holyrood chamber and if passed would allow councils to create rent control areas where rent is capped to certain levels. Ministers have tabled an amendment proposing that rent rises are capped to the rate of inflation plus 1% to a maximum of 6%. The Scottish Government has also set a target date for local authorities to make market assessments and recommendations on whether or not to introduce rent control areas. The new date is May 31 2027. A Scottish Government spokesman said: 'A number of amendments have been lodged by opposition MSPs at stage 2 of the Housing (Scotland) Bill and will be considered by the Local Government, Housing and Planning Committee.'
Yahoo
23-04-2025
- Business
- Yahoo
SNP announces loopholes for new rent controls
Landlords could be allowed to increase their rents by more than the SNP's proposed cap if they make 'significant improvements' to their properties, ministers have announced. The Scottish Government has tabled plans at Holyrood that would see rent increases in 'control areas' capped at 1 per cent above the consumer prices index measure of inflation, up to a maximum of 6 per cent. Shirley-Anne Somerville, the Social Justice Secretary, unveiled plans for exemptions to the cap, allowing landlords to increase rents by more in limited circumstances. These included where a property has undergone major improvements and if it is being rented out at 'significantly below-market rates'. Among the potential upgrades that could give the green light for higher increases are a new heating system, improved windows or fitting a new kitchen or bathroom. Exemptions to the cap could also be applied to homes that are specifically built to rent and 'mid-market' homes, which are aimed at assisting people on low to moderate incomes. The plans were published as industry data showed a 26 per cent drop in the number of build-to-rent homes under construction in Scotland in the first quarter of this year, compared to the same period in 2024. Scotland has recorded zero growth in the number of new build-to-rent schemes being submitted for planning compared with a 6 per cent rise in England. The Scottish Property Federation (SPF), which represents the country's property industry, said the figures were a 'natural consequence' of investor confidence being damaged thanks to rent controls. The Tories said the 'collapse' in construction was a 'direct' result of the SNP's refusal to listen to warnings that the controls would exacerbate Scotland's housing emergency. Nicola Sturgeon's government introduced an emergency rent cap in October 2022. The policy was supposed to be a short-term measure to support tenants through the cost of living crisis. However, the cap was extended and, while it ended last year, a temporary framework of rent controls is still in place while the SNP finalises the Bill, which aims to make them permanent. Under the plans, added to the Housing (Scotland) Bill, the cap would apply both to rent increases during the term of a tenancy and in between tenancies. Ministers would be tasked with determining which areas in Scotland should fall under control areas, with 12 of Scotland's authorities having declared a housing emergency. But industry figures have disclosed that the previous controls backfired by hiking average rent rises in Scotland, above the increases seen in England, after landlords withdrew their properties from the market. It emerged last month that building work started last year on the lowest number of private houses since 2013, apart from during the pandemic. Unveiling a consultation on the possible exemptions to the cap, Ms 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.' She added: 'The responses 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.' But David Melhuish, the SPF's director, said: 'While construction activity has slowed across the whole of the UK, Scotland has seen the most significant fall. 'Unless the Scottish Government moves to restore investor confidence through supporting new builds and amending some of its more controversial policies such as between tenancy rent controls, then we will soon exhaust the new supply pipeline of build-to-rent homes as no new planning applications are coming forward and those with approval are simply not being progressed.' Meghan Gallacher, the Scottish shadow housing secretary, said: 'During a housing emergency, the last thing would-be renters need is fewer properties on the market – but that is what the SNP, by following extremist Greens policies, have ensured. 'Their hostility toward private investment has sabotaged Scotland's rental market, and tenants will be the ones to suffer.' A Scottish Government spokesman said: 'We recognise that Scotland needs a thriving private rented sector offering good quality, affordable housing options while valuing the benefit that investment in rented property delivers. 'Throughout the development of the measures in the Housing (Scotland) Bill, we have been working with tenants, landlords, investors and developers to make sure we strike that appropriate balance. 'A consultation announced today, will seek views on how the powers within the Bill could be used to exempt certain types of properties from rent control and the circumstances where rents could be increased above the level of any introduced rent cap.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
23-04-2025
- Business
- Telegraph
SNP announces loopholes for new rent controls
Landlords could be allowed to increase their rents by more than the SNP's proposed cap if they make 'significant improvements' to their properties, ministers have announced. The Scottish Government has tabled plans at Holyrood that would see rent increases in 'control areas' capped at 1 per cent above the consumer prices index measure of inflation, up to a maximum of 6 per cent. Shirley-Anne Somerville, the Social Justice Secretary, unveiled plans for exemptions to the cap, allowing landlords to increase rents by more in limited circumstances. These included where a property has undergone major improvements and if it is being rented out at 'significantly below-market rates'. Among the potential upgrades that could give the green light for higher increases are a new heating system, improved windows or fitting a new kitchen or bathroom. Exemptions to the cap could also be applied to homes that are specifically built to rent and 'mid-market' homes, which are aimed at assisting people on low to moderate incomes. The plans were published as industry data showed a 26 per cent drop in the number of build-to-rent homes under construction in Scotland in the first quarter of this year, compared to the same period in 2024. Scotland has recorded zero growth in the number of new build-to-rent schemes being submitted for planning compared with a 6 per cent rise in England. The Scottish Property Federation (SPF), which represents the country's property industry, said the figures were a 'natural consequence' of investor confidence being damaged thanks to rent controls. The Tories said the 'collapse' in construction was a 'direct' result of the SNP's refusal to listen to warnings that the controls would exacerbate Scotland's housing emergency. Nicola Sturgeon 's government introduced an emergency rent cap in October 2022. The policy was supposed to be a short-term measure to support tenants through the cost of living crisis. However, the cap was extended and, while it ended last year, a temporary framework of rent controls is still in place while the SNP finalises the Bill, which aims to make them permanent. Under the plans, added to the Housing (Scotland) Bill, the cap would apply both to rent increases during the term of a tenancy and in between tenancies. Ministers would be tasked with determining which areas in Scotland should fall under control areas, with 12 of Scotland's authorities having declared a housing emergency. But industry figures have disclosed that the previous controls backfired by hiking average rent rises in Scotland, above the increases seen in England, after landlords withdrew their properties from the market. It emerged last month that building work started last year on the lowest number of private houses since 2013, apart from during the pandemic. Unveiling a consultation on the possible exemptions to the cap, Ms 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.' She added: 'The responses 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.' But David Melhuish, the SPF's director, said: 'While construction activity has slowed across the whole of the UK, Scotland has seen the most significant fall. 'Unless the Scottish Government moves to restore investor confidence through supporting new builds and amending some of its more controversial policies such as between tenancy rent controls, then we will soon exhaust the new supply pipeline of build-to-rent homes as no new planning applications are coming forward and those with approval are simply not being progressed.' Meghan Gallacher, the Scottish shadow housing secretary, said: 'During a housing emergency, the last thing would-be renters need is fewer properties on the market – but that is what the SNP, by following extremist Greens policies, have ensured. 'Their hostility toward private investment has sabotaged Scotland's rental market, and tenants will be the ones to suffer.' A Scottish Government spokesman said: 'We recognise that Scotland needs a thriving private rented sector offering good quality, affordable housing options while valuing the benefit that investment in rented property delivers. 'Throughout the development of the measures in the Housing (Scotland) Bill, we have been working with tenants, landlords, investors and developers to make sure we strike that appropriate balance. ' A consultation announced today, will seek views on how the powers within the Bill could be used to exempt certain types of properties from rent control and the circumstances where rents could be increased above the level of any introduced rent cap.'
