While the UK government has addressed a tax loophole which has seen property owners claim that their second properties are holiday lets, a Conservative MP has said that there is still “much more to do” to ensure those making unfair use of the tax break pay their fair share.
Under current rules, owners of second homes in England can declare that they are letting their additional property out to holidaymakers and avoid paying council tax on the property concerned. Declaring second properties as a holiday let also makes the owner eligible for small business rates relief.
Yet, many claimants do not let out their second properties and instead leave them unoccupied, meaning they wrongly benefit from the tax break.
To address the problem, the government has unveiled a raft of proposals which outline that holiday lets must be rented out for a minimum of 70 days per year and must be made available for rent for at least 140 days a year to qualify for small business rates relief.
Outlining the plans, Levelling Up secretary Michael Gove said: “The government backs small businesses, including responsible short-term letting, which attracts tourists and brings significant investment to local communities.
“However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost. The action we are taking will create a fairer system, ensuring that second homeowners are contributing their share to the local services they benefit from.”
The county of Cornwall in particular has been adversely affected by a large quantity of empty second homes in the region. The local authority, Cornwall Council, says that the proliferation of vacant second properties has led to under-occupation of local housing and pushed up prices.
The Conservative MP for the Cornwall constituency of St Austell and Newquay, Steve Double [pictured], has said that plans to close the second homes loophole constitute an “important step” but acknowledged there was “still much more to do” to ensure second homeowners “contribute to the provision of local services.”
Double suggested that a “register of holiday lets” could be introduced as a further measure, saying: “I look forward to continuing to work with the government and Cornwall Council on further steps, such as the introduction of a register for holiday lets, in the near future.”
Andrew George, who served as a Liberal Democrat MP for St Ives between 1997 and 2015, was more critical of the proposed rule change as it currently stands, labelling it “so limp it will have zero effect”.
George said: “[Homeowners] proving they let the property for just 70 of 365 days each year doesn't in my view prove these second homes are serious intentional businesses.”
Photo taken from Wikimedia Commons