Council tax ‘dodgers’ coining in on upmarket Elie’s booming holiday home market are freeriding on disadvantaged locals.
That’s the reaction of a local councillor, after the East Fife Mail revealed 80 per cent of holiday-let owners in the area – where a des res can cost upwards of £2 million – were contributing nothing to the regional purse.
“It’s knocking the heart and soul out the village,” said Councillor Linda Holt, “but I don’t think Fife Council has the power to change anything.
“It’s scandalous that they don’t pay council tax. They’re free-riding on locals who keep the village’s services moving along.
“And it’s wrong that they don’t pay business rates. It’s government-sanctioned tax avoidance.”
According to Fife Council, second homes comprise 37 per cent of all available housing in Elie and Earlsferry but the market is also home to a rapidly growing market for holiday lets.
Of the current figure of 87 properties, 67 are eligible for full rates relief and of the remaining 20 properties (for example, shops, restaurants and public house) only five are liable for payment of the full rates.
The others are in receipt of relief ranging from 25–100 per cent.
The holiday let loophole is perfectly legal – as long as the property is made available to let for more than 140 nights a year, owners are eligible for rates relief under the Small Business Bonus Scheme.
And it appears that more and more people are jumping on the bandwagon.
According to estate agents Pagan Osborne, which sell the lion’s share of property in the area, business is booming for holiday let buyers, many of whom live in Edinburgh and Glasgow.
“Elie properties that we sell are nearly always for second homes, of the last 12 sales we have only sold one house as a main home to an existing Elie resident downsizing,” said Anna Morton, senior valuer.
“We have generations of families returning sometimes to the same house.
“Earlsferry with its proximity between the beach and golf course is always popular.”
She added: “We are often asked the potential rental income which is definitely taken into account to help decide between properties.”
“In the last six months 50 per cent of the properties we have sold ended up at closing dates with an average of a 22 per cent paid over asking prices.”
According to Rightmove, the average property in Elie is priced at £444,000 – a price similar to a New Town pad in Edinburgh.
Savills, which specialises in high-end real estate, is currently selling a prime Earlsferry property for £2.1 million.
However, in an indication of how desirable Elie is, the firm also recently sold a former weaver’s cottage, so compact and bijou it was marketed as ‘The Cupboard’ .
Buyers queued up to snap up the 37 sq m property, which “flew” at a premium significantly above its £155k asking price.
Last year the Scottish Government imposed an additional ‘slab’ rate of three pre cent stamp duty on second homes.
A spokesman for Savills said the new Land and Buildings Transaction Tax (LBTT) had significantly slowed the market in £1million-plus properties.
However, he added: “The £300,000-500,000 market for holiday homes is extremely strong.
“There’s a lot of people on our database.”
Elie and St Andrews were “by far” the strongest markets in Fife, with buyers accepting nothing outside these “exclusive” locations.
While Savills believes the building of new affordable housing at Elie might dilute the village’s exclusivity, Cllr Linda Holt maintains it aggravates the situation.
She said: “Community councils and residents are happy with new housing, as long as they are for people in the area, but as soon as these houses are on the market they are snapped up as golf homes or holiday homes.
“Take a look at recent developments in ‘affordable housing’ in Kingsbarns– 90 per cent were sold as second homes.
“I’ve had local residents break down crying at community council meetings, saying they couldn’t afford to buy a home.
“Elie is the worst; it’s the most extreme. But Crail, Anstruther, Pittenweem and to a lesser extent St Monans are being affected by this. Inhabitants are all complaining about it.”
Cllr Holt said she would be raising the issue with Fife Council, in the hope that the authority would lobby the Scottish Government.
She said: “ It has to be a national legislation change; we need to look at ways making second home owners pay for the privilege.
“It’s been like this for years and it’s getting worse. It just make it hard for the people there to sustain the community and the school.
She added: “Anything that puts the brakes on the holiday home market would be a good thing.”
The Scottish Government’s Barclay review group is currently examining the business rates system to support business growth and long term investment and reflect changing marketplaces.
A Scottish Government spokesperson said: “We are aware of the position regarding holiday lets and local taxation, informed by our engagement with local authorities including Fife Council.
“The Barclay review of non-domestic rates is due to conclude this summer, and we have committed to respond swiftly.”