- Are YOU a second home owner using the loophole – or are you worried your neighbours are taking advantage of it? Email tom.cotterill@mailonline.co.uk
Suspicious second home owners are using a little-known loophole to dodge huge council tax bills and keep properties in lucrative British holiday hotspots.
Experts fear crafty property barons are putting their homes on the market to exploit a legal get-around that is helping them avoid new council tax premiums.
Since April 1, local authorities have been able to charge a 100 per cent premium on second homes under new powers introduced in the 2023 Levelling Up and Regeneration Act.
But some property leaders say homeowners are ‘raising eyebrows’ by taking advantage of a tax relief by putting their second homes on the market.
By listing their holiday properties for sale, owners can receive a 12-month exemption from the higher council levy.
The tactic is fully legal as long as properties are publicly marketed and listed at a price in line with the local area.
However, questions are starting to be raised about the number of for-sale homes flooding the markets in popular holiday spots.
Ben Maguire, North Cornwall MP, said the huge number of properties up for sale in the coastal resort town of Padstow was ‘suspicious’.
Suspicious second home owners are reportedly using a little-known loophole to dodge huge council tax bills to keep properties in lucrative British holiday hotspot like Padstow (pictured)
Concerns have been raised around the number of second homes for sale in Padstow amid claims property owners were using a loophole to dodge a new high rate of tax (file image)
‘Houses here sell like hot cakes. It’s slightly suspicious, seeing that,’ he told the Telegraph. ‘They’ve been on the market a long time.’
Estate agents Hamptons say only about a fifth of second home put on this market this year are under offer.
Property experts have now accused some second home owners of ‘playing the game’, with sales being slow-moving across the board.
Harry Goodliffe, of HTG Mortgages in Hampshire, says properties have been popping up at ‘inflated prices or with zero real marketing effort’ to take advantage of the 12-month tax relief.
‘This loophole might be legal, but it’s raising eyebrows. List the house, dodge the tax, but don’t actually sell,’ he told the Telegraph.
Councillor James O’Keefe is a born and bred ‘Padstonian’, having lived in the town all his life.
He is now its local mayor and said the number of second homes being snaffled up in the picturesque coastal resort – he dubs a ‘foodies’ paradise’ – is a real problem.
‘A lot of people are putting their houses on the market which is flooding it with homes but they’re at such ridiculous prices it’s not helping the housing crisis locals face,’ he told MailOnline.
Estate agents Hamptons say only about a fifth of second home put on this market this year are under offer. Pictured is Padstow harbour
People snaffling up second homes in Padstow has been dubbed a ‘real problem’ by the town’s mayor
Ben Maguire (pictured) North Cornwall MP, said the huge number of properties up for sale in the coastal resort town of Padstow was ‘suspicious’.
‘At the start of the pandemic, a lot of properties were bought by people looking to make a quick buck by charging mega money to rent them out.
‘Five years on and the town is a lot quieter now because the amount of second homes. They’re not renting them out because people will not pay these ridiculous rents they want for week or fortnight.’
Liberal Democrat Cllr O’Keefe added locals were being driven away from Padstow due to the ‘unaffordable’ price of properties, driven up by the influx of second home owners.
‘Padstow’s harbour is unspoiled, it’s a beauty spot,’ he added. ‘But there is nothing for locals. All the shops have moved on and the ones that remain are geared up for holidays and tourism.’
Hitting out at those second home owner clogging the housing market, he added: ‘These loopholes need addressing and need looking at… It is suspicious how many homes are now being put on the market.’
The average second home owner has seen their tax bill balloon 77 per cent to £3,672 this year as a result of the new premium.
A growing number are believed to be dodging the hikes by putting their homes on the market with little real intention to ever sell them, with the new ‘tactic’ emerging in the last few months, experts claimed.
The holiday homes in England taking advantage of the tax loophole follow a similar dodge in Wales, in which second home owners there saw their bills triple since last April.
The tax exemption can last for a maximum of 12 months.
However, councils do have discretionary powers to extend this if a sale is almost complete.