Short-term lets consultation: response analysis

The Barclay Review on Non-Domestic Rates

154. The independent Barclay Review on non-domestic rates noted that some property owners, to avoid paying council tax on second homes, and because there is currently no requirement to provide evidence of actual letting, may claim that the property has moved from domestic use to non-domestic use as self-catering holiday accommodation. If the rateable value is low enough, they can apply for SBBS relief and receive up to 100% non-domestic rates relief. Instead they will be liable for business water and sewerage charges and waste disposal charges. However, anecdotal evidence suggests that self-catering properties do not always face non-domestic charges in other areas, and are therefore not contributing to local services. To counteract this issue, the Barclay Review recommended that self-catering properties should be required to prove an intention to let for 140 days in the year as well as evidence of actual letting for 70 days in order to be considered exempt from Council Tax and liable for non-domestic rates. Following on from this, the Non-Domestic Rates (Scotland) Bill makes provision for local authorities to have discretion in certain circumstances over the criteria defining a class of property that is exempt from council tax. Question 13 asked,

Q13: 'Do you have any comments on the additional eligibility requirements recommended by the Barclay Review?'

155. A total of 454 respondents commented at this question; the following table provides a breakdown of those who responded.

Table 17: Q13

156. The key comment at this question, cited by a large minority of respondents across all sub-groups, was one of agreement with the recommendations made by the Barclay Review. However, there was a degree of support for local authorities (this comment came primarily from community organisations and local authorities) to have discretionary powers to decide upon the number of days of letting as not all areas across Scotland will be able to let for as many as 70 days. Examples were provided of longer letting opportunities in Edinburgh and Glasgow and shorter seasons in more rural areas.

157. In line with responses made at the previous question, a small minority of respondents, primarily affected residents, community organisations and host intermediaries, felt that there should be no exemptions, so that owners pay either council tax or non-domestic rates, with no rates relief and a scrapping of SBBS.

158. Once again, there were some suggestions, primarily from affected residents, community organisations, host intermediaries and other landlords that all owners should pay council tax, with the reasoning being that this would be easier to apply. Also, and mentioned by higher numbers of affected residents and host intermediaries, calls for owners to be contributing something towards public services that are used by guests.

159. There was some agreement from a few respondents - often from hosts and hotels / B&Bs - that owners should be required to prove an intention to let in the year, as well as providing evidence of actual letting in order to be considered exempt from council tax, and liable for non-domestic rates.

160. Comments made by very small numbers of respondents included:

• Reference to a need for regulation and enforcement; and a need for sanctions to be applied.
• A need for a registration system to be introduced.
• A need to harmonise different tax thresholds as there is an incongruity between the Barclay Review recommendation and HMRC requirements for business tax treatment of furnished holiday lets. There were a small number of suggestions that HMRC tax information could be used as proof of letting a property.