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Second Homeowners Face Potential Spike in Council Tax

Journalist: Riz Malik

ended 31. July 2023

The government wants to boost local authorities by allowing them to raise council tax on second homes by up to 100%. This effort aims to reduce the number of vacant properties in tourist areas, hence increasing housing availability for people looking to buy in their community. The increased tax could generate an extra £200 million in income.

How might this proposed strategy help combat the housing crisis? What ideal uses could the councils have for the additional revenue? Could there be any unintended repercussions of this initiative? Please share your insights below.

8 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
This appears to be yet another scheme from the Conservatives that might not sit well with their primary supporters. Owners of secondary properties contribute significant revenue to the local economy. Even if a larger number of homes were to become available, the prevailing interest rates might still render them unaffordable for the locals. Rather than solving the housing crisis in the UK, this strategy seems primarily aimed at appealing to voters in the run-up to a general election.
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Kate Allen
Owner at Finest Stays
Talk about a blunt tool to solve a housing shortage, the blame of which lies firmly on the shoulders of consecutive governments failing to meet their own housing targets. In honeypot locations, such as Salcombe, the doubling of council tax will not stop second homeowners investing; what it does instead is irritate the very lifeblood of our local economy. Bitter locals and desperate vote winning councillors will be rubbing their hands with glee at the idea of double council tax, but this is a fools errand.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Whilst it would be nice to see fewer vacant homes and more homes available for people to buy as their main residence the 3% surcharge on stamp duty didn't dissuade those able to afford a second home from buying one, and therefore I do not feel an increase in council tax will achieve that either. It will however raise more funds for the councils in those areas which may be used to improve services, which those living in these tourist areas may see as a fair trade-off. The second homeowners will just raise the Airbnb rates when not using the property.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Policies like this need to be considered carefully to ensure that the local community is protected but also that vulnerable second homeowners are pushed into selling up. Targeting larger, more valuable homes may be a way of ensuring that revenue is collected and sentiment is turned without causing financial chaos to many.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
This proposal to allow LAs to raise council tax on second homes or vacant properties in tourist areas will certainly increase housing availability for people looking to buy in their community. However, this strategy could disproportionately affect those who rely on income from second homes and there is no guarantee that the additional revenue will be used effectively by local authorities to address the housing crisis as we have seen with successive LAs such as Northamptonshire, Croydon, Slough and Northumberland going bankrupt with dozens more on the brink. The LAs need to prove that they can prudently deploy the funds before raising more money off the back of local residents.

This initiative could also have unintended consequences, such as a decrease in tourism in areas where second homes are prevalent, as owners will be less inclined to rent out their homes. This could have a knock-on effect on local economies that rely on tourism.
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Joe Stallard
Director and Advisor at House and Holiday Home Mortgages
Undoubtedly there are areas in the UK that need help in ensuring the right number and quality of second properties are present, however these require localised measures more than anything.

Blaming second home owners makes a good media headline, however it’s papering over the real issues; the lack of quality housing being built in these areas and the lack of investment in job opportunities.

If only the government would encourage more development of new housing rather than trying to score cheap electoral points…
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Graham Cox
Director at Bridging Hub
Doubling council tax on second homes is to be applauded. Too many tourist hotspots have seen surging house prices thanks to second homeowners snapping up properties for holiday lets or otherwise left vacant for large parts of the year. The result is locals becoming priced out of buying in the neighborhoods they grew up in. Owners of holiday lets can also benefit from small business rate relief. In short, it's not a level playing field.

Frankly, at this point, I'd like to see local authorities prevent second home ownership where the buyers intend to leave the property vacant for long periods.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
You'd think it would be a solid vote winner but what would be nice would be if the funds raised were ring-fenced to be spent on building more housing. Schemes like this are all window dressing until we do something about the real issue which is that we don't build enough houses in the UK.