Midlothian Council implemented a graduated premium system for second homes from April 1, with premiums based on how long a property has been used as a non-primary residence. The council's second-home premium rates are 100% for properties owned less than two years, 300% for two to three years, and 500% for over three years. For an average Band D property in Midlothian, the highest premium rate could result in an annual bill of £14,810.88. The policy also applies equivalent graduated increases to long-term empty homes in Midlothian. Midlothian Council argues the policy will generate up to £200,000 in additional revenue for 2026-27 and boost local housing supply by discouraging long-term second-home ownership. There are around 35 second homes in Midlothian.
Midlothian Council's justification centers on addressing housing shortages and generating funds for local services. The council contends that the graduated premiums will incentivize owners to either sell or rent out properties to permanent residents, thereby increasing available housing. With around 35 second homes in Midlothian, the policy is tailored to a small but impactful segment of the housing market. The additional revenue projected for 2026-27 could support community initiatives or infrastructure, though the exact allocation remains unspecified.
New powers granted to Scottish local authorities on April 1 allow them to set uncapped second-home premiums, following an amendment in last year's Housing Bill by the Scottish Greens. This legislative change enables councils to exceed previous limits, contrasting with England's 100% cap on second-home premiums and Wales's maximum 300% uplift.
Edinburgh Council introduced a 300% premium on second homes on April 1. Edinburgh Council suspended its plans to increase council tax on second homeowners by 300% on April 9, eight days after announcing the change. During the brief period the new regime was in effect, some homeowners in Edinburgh reported having already been billed under the increased tax rate. One homeowner in Edinburgh received an email on Wednesday notifying them of the reversal, having already had £1,430 leave their bank account, and would have faced a £17,240 yearly bill for their Band H property under the new regime.
Edinburgh Council stated that suspending the increase will allow further assessment to ensure it meets policy objectives, and that the introduction required more work including engagement with those affected.
Second homes are defined as properties lived in for over 25 days a year but not used as a main residence. There are roughly 20,927 second homes across Scotland, with the highest number in the Outer Hebrides and Argyll and Bute.
In the Highlands, council tax bills for second homes are expected to hit £6,536 per year from April under the 300% premium. Highland Council has warned that the premium could rise to 350% in 2027 and 400% in 2028. There are more second homes and long-term empty properties in the Highlands than in any other authority in Scotland.
Local leaders hope the premium increases will discourage second-home owners from using properties as holiday homes and make housing available for permanent residents. It is estimated that around 5,000 homes in the UK will be impacted by the new charging system for second homes.
Midlothian is home to roughly 100,000 people and is located just south of Edinburgh.
Key unknowns persist regarding Edinburgh Council's assessment criteria for the suspended premium and the refund process for homeowners billed under the increased rate.
Further unknowns include the projected revenue impact of Midlothian's 500% premium given the small number of second homes, and how councils will monitor and enforce the definition of second homes.