How the new council tax hike could affect second-home owners and local communities
The UK government is planning to give local authorities more powers to increase council tax on second homes, as part of its Levelling Up and Regeneration Bill. This could mean that owners of holiday homes and other properties that are not their main residence could face paying up to twice the amount of council tax as they currently do. The aim of this policy is to address the housing shortage and affordability issues that affect many rural and coastal areas, where second homes are prevalent.
According to the latest figures, there were over 260,000 second homes in England in 2021¹, with some regions having more than 10% of their housing stock classified as such². These properties are often left empty for most of the year, reducing the supply of available housing for local residents and driving up prices. Moreover, second-home owners are seen as contributing less to the local economy and services than permanent residents, as they spend less time and money in the area.
The government's proposal would allow councils to charge up to 200% of the full rate of council tax on second homes from April 2025, bringing them in line with long-term empty homes. The consultation will also seek views on whether to charge more than 200% in future years, and whether to change the definition of when a property offering self-catered accommodation becomes liable for non-domestic rates³.
The government hopes that this measure will encourage second-home owners to either sell their properties or rent them out more frequently, thus increasing the availability and affordability of housing for local people. It also expects that this will generate more revenue for councils to invest in local services and infrastructure, as well as support the tourism industry by increasing the supply of self-catering accommodation.
However, not everyone is happy with this plan. Some second-home owners and tourism industry representatives have argued that they are being unfairly targeted and scapegoated for the government's failure to build more affordable housing. They claim that they already pay their fair share of taxes and contribute to the local economy by creating jobs, supporting businesses, and maintaining their properties. They also fear that this policy will deter people from buying or visiting second homes, which could have a negative impact on the local economy and culture.
Furthermore, some critics have pointed out that this policy may not be effective in solving the housing crisis, as it does not address the underlying causes of low supply and high demand. They suggest that instead of penalising second-home owners, the government should focus on building more social and affordable housing, improving transport links and broadband access, and supporting rural development and regeneration.
The consultation on this proposal will run until October 2023, and all responses will be carefully considered by the government and Cosla, the organisation representing Scottish councils. The final decision will depend on various factors, such as the impact on housing supply and demand, local economies and communities, tourism and hospitality sectors, and council revenues and services. The government has stated that it wants to strike a balance between increasing the availability of housing and recognising the benefits of self-catering accommodation and second homes³.
What do you think about this proposal? Do you own or rent a second home? How would this affect you and your area? Share your thoughts in the comments below.
(1) Second-home owners could soon pay twice the amount of council tax as .... https://www.dailymail.co.uk/news/article-12350439/Second-home-owners-soon-pay-twice-council-tax-government-prepares-hand-local-authorities-powers-raid-holiday-homes.html.
(2) Plans to double council tax for second home owners - BBC News. https://www.bbc.co.uk/news/uk-scotland-65296678.
(3) Second home owners face double council tax as Tories aim to win back .... https://www.telegraph.co.uk/politics/2022/05/08/second-home-owners-face-double-council-tax-tories-aim-win-back/.
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