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Good morning, convener, and thanks for the opportunity to speak to the draft regulations.

The policy was first explored in partnership with local government through the joint working group on council tax reform, in keeping with the spirit of the Verity house agreement. That work was informed by the joint public consultation on the council tax treatment of second homes and long-term empty homes, which sought views on increasing flexibility for councils and received significant engagement from stakeholders and members of the public.

Taken together, that engagement recognised that decisions about local taxation and housing pressures should be informed by collaboration and evidence, while, ultimately, respecting the democratic accountability of local authorities.

The regulations that are before the Parliament deliver on a key priority of the Government: to deliver a fairer housing and taxation system. They will give effect to powers that were created by the Housing (Scotland) Act 2025. That act amended the legislative framework that governs council tax variation for unoccupied dwellings and provided the opportunity to remove the previous statutory cap on the level of premium that local authorities may apply to second homes and long-term empty homes.

The regulations have two principal objectives. First, they establish and maintain a national default premium of 100 per cent for second homes and long-term empty homes. Secondly, they remove the previous statutory cap and empower councils to determine the appropriate premium in their own area—whether that is to apply the 100 per cent default, increase the premium above that level, reduce it, apply no premium at all or offer a discount. In doing so, the regulations place decisions about the balance of housing use firmly in the hands of councils, which are best placed to assess their own housing markets and community circumstances.

Further, the Housing (Scotland) Act 2025 enables the Scottish ministers to issue statutory guidance to which local authorities must have regard. Guidance is currently being agreed between the Scottish Government and the Convention of Scottish Local Authorities. It aims to support a consistency of approach, ensure proportionality and highlight circumstances in which applying a premium may not advance the policy intent.

It is important to emphasise that this is an enabling instrument. It does not mandate any increase in council tax. Any decision to vary the premium will rest with individual local authorities, which are democratically elected and accountable to their own communities.

Housing markets differ significantly across Scotland. The presence and impact of second homes and long-term empty homes varies between urban, rural and island communities. In some areas, high levels of unoccupied dwellings can affect housing availability for permanent residents and place pressure on local supply. In others, local dynamics may differ. The regulations recognise that local authorities are best placed to assess their own housing pressures, affordability challenges and sustainability considerations. The changes will put councils front and centre in determining how council tax can support the effective use of housing stock in their area.

Alongside that flexibility, important safeguards remain in place. Existing statutory exemptions and discounts are unaffected by the regulations. In addition, guidance will make it clear that councils should act proportionately and in line with the purpose of the legislation, including in circumstances in which a dwelling is unoccupied because a liable person is required to live away from home because of their employment in the armed forces or healthcare. The intention is to ensure that greater local flexibility is balanced with fairness and recognition of legitimate circumstances.

In summary, the regulations deliver on the powers that were created by the Housing (Scotland) Act 2025 to remove constraints, maintain a clear national framework and trust local authorities to make accountable decisions about how council tax supports housing policy in their communities. They are enabling, proportionate and grounded in earlier partnership work with local government.

:As Fiona Hepburn outlined, the policy builds on the existing discretionary powers of local authorities to take account of individual circumstances, which may be particular to that local authority area. The issue of seasonal workers has been mentioned, and there may be other issues. We would expect local authorities to use their discretionary powers. However, we will pick that issue up and ensure that it is specifically referenced in the guidance, if it is not already.

As Fiona Hepburn said, we will also monitor the situation. If we feel that a local authority is not using its discretionary powers in a way that is appropriate—for example, in relation to something such as the specific case that Meghan Gallacher raises—we have the opportunity to strengthen the statutory guidance, which is exactly that: it is guidance on a statutory footing. Therefore, it has to be taken account of by the local authority, and cannot simply be set aside.

I give Meghan Gallacher those assurances that there will be safeguards in relation to those particular circumstances.

:There will be a level of information collected through the work that local authority empty homes officers are doing—I think that is the correct term for them. There will be some information on the reclassification of a number of homes for council tax purposes. Over time, it will be important to track whether the regulations that are now before us have a further impact beyond what is already in place.

:When do we intend to publish the guidance, James?

: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?

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: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.