Seòmar agus comataidhean

Thank you very much, convener, and good morning to the committee.

The draft instrument under consideration has a twofold purpose. First, it is intended to provide councils with discretion over the council tax treatment of second homes. If introduced, it will enable councils to charge up to a 100 per cent premium on second homes. The instrument also seeks to allow councils to grant a six-month grace period from the 100 per cent empty homes council tax premium, which is aimed at incentivising the reoccupation of empty homes. The regulations seek to deliver both changes with effect from 1 April 2024.

In the spirit of the Verity house agreement, both of the policies contained in the instrument have been developed in partnership with local government. Last year, I convened the joint working group on sources of local government funding and council tax reform, which was co-chaired by Scottish ministers and the Convention of Scottish Local Authorities. That group has considered and endorsed the final policies in the instrument.

In April 2023, we published a consultation in partnership with COSLA on the council tax treatment of second and long-term empty homes. That consultation sought views on giving discretionary powers to local authorities to increase the rate of council tax on second and empty homes, and the 100 per cent council tax premium on second homes received majority support from respondents to the consultation.

The discretion to apply to second homes a discount of up to 50 per cent or a premium of up to 100 per cent ensures parity with the treatment of long-term empty properties. If implemented, the discretionary power would put councils front and centre in deciding how to achieve the right balance in the use of housing to meet local needs, enabling them, where necessary, to encourage more residential accommodation to be in occupation and used as homes for living in. That is consistent with our intention, set out in the Verity house agreement, to provide greater flexibilities to local government. It also dovetails with the Scottish Government’s “Housing to 2040” strategy, which commits to providing local authorities with greater discretion to encourage greater occupancy of second homes. It should also be noted that the UK Government has very recently legislated to provide councils in England with the same power to apply a 100 per cent council tax premium on empty homes.

Let me turn to the empty homes grace period that is contained in the instrument. The issue was considered by the joint working group following the publication of an independent audit report on the effectiveness of Scotland’s long-term empty homes policy that was produced by Indigo House. That report recommended that the council tax premium on empty homes could better incentivise bringing empty homes back into use. Reflecting on that recommendation, in partnership with COSLA, we agreed that the council tax premium on empty homes could be a disincentive to bringing empty homes back into use when a long-term empty property changes hands after a sale.

Therefore, the regulations provide for a six-month exclusion from the 100 per cent council tax premium when a long-term empty property is purchased by a new owner and renovations or repairs are being undertaken, and local authorities will have discretion to extend that six-month grace period. The measure will prevent the empty homes council tax premium from becoming a deterrent to new ownership.

The draft regulations that have been laid before Parliament deliver on our commitment to a fairer housing and taxation system. They empower local authorities to make decisions about the council tax treatment of second homes in determining the balance in the use of housing to meet local needs. They recognise that local areas differ across the country and that what may cause pressure in some communities could equally provide a benefit to others.

Convener, I will conclude there. I hope that members will agree to support the instrument today.

We want the discretion and flexibility of the existing premium on empty homes to apply to this measure. As I say, we are committed to engaging with COSLA in dialogue on joint guidance. We recognise that it is a discretionary power for local authorities, so we want the approach to how the revenue is used to be consistent with that discretion.

That is demonstrative of our commitment to address the issues. We are utilising all the powers at our disposal in the progression of our wider ambitions around housing to 2040. It was identified via the housing audit report, which I referred to in my opening statement, that the 100 per cent premium on empty homes could act as a disincentive for those who are purchasing empty homes. The regulations help to address that through the six-month grace period. Individual local authorities also have the discretion to extend that period, but that is a matter for them.

I understand the premise of the question. It is inherent in our empowering local authorities to have that discretion that variation will be part of it, but it will be a matter for local authorities to determine. It is a shared ambition with local authorities to ensure that we bring as many empty homes back into use as possible, and I am sure that that will inform the decision-making process that local authorities follow. The discretionary elements across the board that we have discussed today are, however, matters for local authorities to take into account. Ultimately, they reflect the fact that local authorities are democratically accountable to their electorates. James, do you want to make any further points?

That came into effect relatively recently.

That is a very helpful suggestion, which I know is informed by your expertise in your previous roles and which I am happy to ensure that we take forward.

I will ask Richard Dennis to come in, in a moment. On the more detailed aspects of the working group and the processes that have informed the recommendations, my direct engagement has been with those representatives, many of whom the committee will have heard from in person or in writing. The process involved those who support and provide advice for people in relation to their financial circumstances, money and debt.

I ask Richard to comment on the work that got us here through the stage 2 working group and the mental health moratorium working group.

There has already been substantial engagement during the process by which the proposals have been developed. There is a clear awareness across the sector that the Parliament is considering the issue, and—

We are not giving specific consideration to that. Again, there is a need for clarity over the proposed criteria for when a mental health moratorium would begin and end. One element is defined by the period of compulsory treatment, and there is the six-month recovery period as well. I clarify that, although the six-month recovery period aligns with the six-month standard moratorium, the period is not fixed in length. We recognise that those who are in a period of recovery will require additional time beyond what might be regarded as a shorter period—for example, it has been suggested that a standard moratorium could be for 12 weeks. One witness raised the potential of that happening in the future. The periods are not fixed or linked.

When it comes to the existing moratorium, we have no intention at the moment of changing the criteria around the ability to extend the period of six months. We recognise that there are, for example, opportunities to seek forbearance through engagement with individual creditors, but there are no specific plans in that space.

We have set out in the consultation a proposal on how the process would operate. There would be an initial process with the mental health professional. With regards to how the second aspect—that is, the engagement with the money adviser—would take place, the proposal is for the adviser to ascertain that the individual understands what the process entails, agrees to it and understands that, within the recovery period, there will be further engagement with the money adviser.

As Richard Dennis touched on, money advisers already have an exceptional amount of experience of engaging with individuals who have varying degrees of mental health conditions.

As I mentioned earlier, the position on the overall delivery is reflected in the consultation. I would not want to repeat myself, but although I recognise that there is a real desire among many in the advice community to be involved, a different approach might be more effective.

As I said, we have been stakeholder led in developing the policy and I intend to be stakeholder led in how we implement it. We will, of course, bear in mind Kevin Stewart’s points to ensure that lived experience is brought to bear in the process, too.