On 1st April 2025, councils in England were given the authority to charge up to 100% council tax premium on secondary homes, affecting holiday homeowners and short-term let landlords.
The premium, also called “additional council tax” is applicable to homes that are furnished but are not used as one’s sole/main residence.
The government describe second homes as “dwellings which are substantially furnished but have no resident (i.e. it is not someone’s sole or main residence).”
This change will cause second homeowners to pay thousands more in council tax, which is estimated to raise millions across the country.
Sky News estimates that over 200 councils will introduce this premium, which could generate up to £445M in extra revenue.
The decision to charge second home council tax premiums is made by local authorities on a discretionary basis, this means that some councils may opt for a premium of just 50% or even none at all.
As such, it’s worth checking with your local authority to confirm the rate of second home council tax premium.
Why are these changes being made?
The change is primarily targeting Airbnbs and second homes around tourist destinations such as Cornwall, Brighton, the Cotswolds, and, of course, cities up and down the country.
As well as a means to combat the extreme housing undersupply, it’s thought that these changes were introduced to combat the oversaturation of second homes and investment properties in the above areas and allow local residents a greater chance to purchase properties in their area.
Naturally, there has been discourse for and against these changes, with those in favour saying it will:
- Reduce the oversaturation of holiday let/ vacant homes in popular areas
- Reduce property prices in the oversaturated areas
- Increase locals’ ability to purchase properties in their area
- Promotes long-term letting, providing more housing stock for year-round occupation.
Those against say:
- Holiday lets (and the tourism they accommodate) generate a lot of revenue, and so by pushing holiday lets out of the sector, tourism could decrease.
- The prices of secondary homes and holiday lets in prime areas are largely unaffordable by the local residents (for example, sea-facing houses in Cornwall).
Who will be affected?
Short-term let landlords, and those with a holiday home, will be affected the most, and many will be forced to sell/repurpose their property to avoid the exorbitant council tax increases.
Airbnb and short-term let landlords may be pushed to long-term letting and applying for planning permission to avoid the increases.
Exemptions
Some properties may have exemptions from the council tax premiums.
Some examples include:
- If the property is actively marketed as ‘for sale’ or ‘for let’
- The property is in the probate process
- The dwelling forms part of a single property which is used as a main residence (annexes, for example).
- Seasonal properties with express planning restrictions that prevent the dwelling from being occupied for 28 continuous days in a year.
There are, of course, more exemptions which may be applied, so if you are the owner of an additional home, be sure to read more about exemptions using the government’s guidance to council tax premiums.
These changes were made via an amendment of the Local Government Finance Act 1992, under the Levelling-up and Regeneration Act 2023.
We covered this topic and more on the most recent episode of our podcast, You can watch it here
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