Second Home Council Tax Funds To Help Meet Rural Housing Shortage

Extra Council Tax paid by owners of second and holiday homes in the Highlands is to be increasingly targeted at providing affordable homes in rural communities where development costs are high and a housing need has been identified. It is estimated that the additional income in the current financial year from the reduction in Council Tax discount on second and holiday homes from 50% to 10% is £2.4 million.

This income has been used to buy land for future development and pay for the costs of preparing these sites but in future will be focused on high-cost rural schemes. Committee members recognised that major challenges are experienced in developing housing in rural areas due to site conditions, high infrastructure costs, few contractors and the lack of economies of scale.

Individual projects in high cost rural areas will be presented to the committee for approval as they are identified throughout the year.

Committee Chairman, Councillor Margaret Davidson, said: “The use of the additional Council Tax income on second and holiday homes will put money back into the very communities that are experiencing housing shortages because of high levels of second home ownership.  We will prioritise part-funding of high cost rural projects in areas of housing need and in accordance with our housing strategy.”

The Committee has also agreed to forward fund new affordable housing projects using the Council’s landbank fund, which currently stands at almost £10 million. The landbank fund is used to grant loans to housing agencies, enabling them to landbank strategic sites in the Highlands and to fund the removal of building constraints on these sites.  The landbank fund has been very useful in securing sites for new affordable housing, which might otherwise have been lost.

The fund is recyclable. When the housing agency disposes of a site or develops housing using other funding the grant is repaid. A total of £12.5 million has been loaned to date, of which £6.6 million has been repaid.

Councillor Davidson said: “In order to minimise the delays in delivering new affordable housing, we will be entering into discussions with the Scottish Government to agree to forward fund some of the new projects, using the landbank fund.”

Earlier, the committee was advised that the Council continues to provide more affordable houses than any other council in Scotland. It is on course to meet its target of providing 2,000 additional affordable houses by 2011.

80% of housing association programmes over the last two years have been delivered through the direct involvement of the Council, recognised as one of the most pro-active in Scotland.

In 2007-8, an investment of £38 million saw work start of 563 houses and a further 350 houses are scheduled to start in this financial year.

Councillor Davidson said: “Our housing development team is doing an outstanding job in working with the Scottish Government and our housing partners in Highland to meet the needs of our Highland communities.”