McArthur pushes for property tax relaxation

Moves are afoot to create more “breathing space” for people trying to sell their home, as the challenges of the coronavirus pandemic continue.

Orkney MSP Liam McArthur has lodged an amendment to this effect on the Scottish Government’s emergency coronavirus legislation, with the aim of reflecting the relatively slower pace of the housing market in rural and island communities, like Orkney.

Mr McArthur’s amendment to the Coronavirus (Scotland) (No 2) Bill seeks to allow people up to three years to sell their old home before they attract a second home tax liability. This is consistent with the timeframe that already exists in England.

Currently, if people don’t manage to sell within 18 months they need to pay an additional dwelling supplement, the Orkney MSP explained. This tax is intended to protect first time buyers, but Mr McArthur is particularly concerned that those selling their homes in Orkney are more vulnerable to the tax because the local market naturally moves at a slower pace.

In Orkney, some properties can remain on the market for prolonged periods, resulting in islanders being more at risk of having to pay additional tax through no fault of their own.  While the Scottish Government is proposing extending the time limit from 18 to 27 months, due to the impact of COVID-19 on the overall housing market, Mr McArthur believes the emergency legislation provides an overdue opportunity to “island proof” the original legislation.

Mr McArthur said: “The additional dwelling supplement is a sensible measure to help protect first time buyers and discourage second home ownership, which can seriously reduce the housing stock available to rent or buy in some parts of the country.

“However, I have long argued that this tax needs to better reflect the needs of island communities like Orkney. It is widely accepted that the housing market here, and other rural and island areas, operates more slowly than other parts of the country.

“As a result, islanders who are making every effort to sell their old home are more likely to be caught by this tax.  That is unfair and is not the point of the tax.

“The effect of the pandemic on the housing market generally means that Ministers are quite rightly rethinking the timeframes that apply overall.  This provides a perfect opportunity to address not just the general need but ensure that the original legislation is ‘island proofed’.

“Extending the timeframe to three years will bring this legislation in line with timeframes elsewhere in the UK and ensure that islanders are no longer more at risk of being ‘surcharged’ through no fault of their own.”