Councils lumped with staggering £334m bill from double tax loophole

Second homeowners skirting the double bill could cost local authorities a staggering £334million. Since 1 April, under the new powers granted by the 2023 Levelling Up and Regeneration Act, local councils have been able to impose a 100% premium on second homes. In Wales, this premium .

However, savvy property moguls have discovered a loophole that allows them to avoid these taxes by listing their second homes as holiday lets and renting them out for at least 70 nights per year. This cunning move qualifies the properties for business rates relief and completely exempts the owners . According to research by property firm Colliers, the total amount of lost council tax revenue has doubled in the past year, rising from £170m.

Politicians and experts now argue that these skyrocketing figures demonstrate that the 100% remium tax is causing more harm than good.

Shadow housing minister Kevin Hollinrake criticised the Government for .

He said: "Labour couldn't even be bothered to carry out any impact assessment, nor have they asked councils to restrict the policy to where there are localised problems in the housing market."

John Webber, from Colliers, stated that it's "making the situation even worse" and highlighted that "less money will be collected locally", resulting in reduced spending on essential local needs such as public services or affordable housing.

He added: "The problem is not second home owners; it is politicians failing to understand the issues and having the courage to do something about it."

Politicians are failing to comprehend the issues and lack the courage to take necessary action. A staggering 230 out of 296 councils in England, and 20 out of 22 in Wales, have accepted the Government's offer and imposed the inflated levy.

For a property to be classified as a holiday let, owners must make it available for at least 140 nights and actually rent it out to visitors for 70 nights within a year.

The council calculates the business rates bill an owner pays based on the property's rateable value, which is determined by its type, size, location and potential rental income from holidaymakers.

Owners who only let one property may be eligible for small business rates relief, potentially receiving up to 100% lief. Properties with a rateable value between £12,001 and £15,000 will see the rate of relief gradually decrease from 100% to 0%

For instance, if the rateable value is £13,500, the owner will receive a 50% discount on their bill. There are approximately 73,838 holiday let properties that qualify for business rates relief in England and Wales.

This figure has decreased from 80,000 last , but Colliers anticipates numbers to surge again due to the double tax raid.

Prior to 2023, property owners merely had to express an intention to use their home as a holiday let to meet the business rates relief qualifications.