Taxpayers in England have been left concerned that councils will follow in the footsteps of their Scottish counterparts, where second home owners face premiums as high as 500pc.
Midlothian council introduced 500pc premiums on April 6 – equivalent to more than £27,000 for some property owners.
However, Edinburgh council was forced to backtrack on plans to impose a 300pc council tax premium on second home owners just eight days after implementing the policy. In a last-minute about-turn last week, the local authority said it had suspended the planned increase because the policy required “further assessment”.
Similarly, Rushcliffe borough council in Nottinghamshire has proposed scrapping the levy entirely, just a year after introducing it. The Conservative-led authority said it was “arguable” whether penalising second home owners “aligned” with its aims to bring empty properties back into use. There are 130 second homes in the area.
Meanwhile Warwick district council was ordered to compensate hundreds of taxpayers after it “acted outside the law” by enforcing the levy despite failing to specify the technicalities of the premium.
‘Punitive taxation’
Joanna Marchong, of the Adam Smith Institute, said: “Second home owners being hit with exorbitant bills shows that what started as a targeted measure has quickly escalated into punitive taxation.
“In many places, these second homes are extremely common and vital to the local economy. Driving these owners out risks stripping vital spending from communities that depend on seasonal demand, from hospitality to local services.
“If policymakers continue down this path, they will damage the very towns they claim to protect.”
Some households will be dealt another blow when Labour’s mansion tax is introduced in 2028. Properties valued at more than £2m will face a £2,500 annual council tax surcharge under new rules announced in the Chancellor’s autumn Budget, rising to £7,500 for homes worth £5m or more.
Around 4,300 second homes in England that are already charged the premium are likely to be dragged into the new surcharge, according to estate agents Hamptons.
Nigel Bishop, of buying agency Recoco Property Search, said Cornwall had been an established second home destination for decades and that “while the local property market is not dependent on second homes, Cornwall’s economy very much is, as many businesses such as restaurants rely on tourism”.
Philip Harvey, of Property Vision, said that the premium would have more unintended consequences.
“The effect on local economies that rely on visitors will be significant. Around 20pc of jobs in Cornwall are tourism-related, which brings approximately £2bn in visitor spending. Of course lots of this is seasonal but many second home owners are the ones who visit out of peak times,” he said.
“However the biggest issue is the lowering of house values, greater supply after all leads to lower prices.”
Cornwall council was approached for comment.
