'What took so long?' - Second home tax loophole closed

Southwold's pretty High Street regularly has bunting lofted from the buildings

Southwold has a high number of people who own second homes, some of which may have been exploiting a tax loophole - Credit: Archant

Community leaders in coastal Suffolk have today welcomed tough Government action to close a loophole which allows owners of second homes to avoid paying council tax.

Secretary of state for levelling up, Michael Gove said homeowners will have to prove they are letting out their properties for a minimum of 70 days a year.

Hotpots such as Southwold and Aldeburgh have huge numbers of second homes and councillors have voiced fears that some could be exploiting the tax loophole while making no efforts to let their properties.

East Suffolk councillor for Southwold, Walberswick and Reydon, David Beavan has been campaigning on the issue and is glad to see the loophole closed, but still isn't happy with the second home situation in Suffolk.

Cllr David Beavan Picture: SARAH LUCY BROWN

Cllr David Beavan - Credit: SARAH LUCY BROWN

He said: "I am really pleased that they have closed this iniquitous loophole at last but what took them so long? Would they have taken three years to shut down benefit fraud?

"And this does not mean that our communities will stop their inexorable drive to be hollowed out as holiday parks.

"I also want to know which 'businesses' claimed £10k Covid grants from the taxpayer. The Council will not tell me.

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"Renting out a house as a holiday let should require change of use planning permission from a residential home so that we can control the number."

Currently businesses with a rateable value of less than £12,000 get business rates relief of 100%, which means the homeowner declaring simply an intention to let can effectively get away with paying neither council tax or business rates.

Now, holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.

Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.

Leader of East Suffolk Council cllr Steve Gallant

Leader of East Suffolk Council cllr Steve Gallant - Credit: East Suffolk Council

In November 2021 East Suffolk Council unanimously agreed to take immediate measures to combat the loophole.

Since then, homes registered as a business have had to pay  for commercial waste collection and not be allowed free household bin collections, as well being barred from using resident parking spaces and household waste recycling centres.

Steve Gallant, leader of East Suffolk Council ,said: “We welcome this announcement from the Government, which will tackle those individuals who abuse the current situation for their own financial gain - an issue which we recently resolved to address ourselves.

“Whilst we are yet to scrutinise the finer details of the announcement, we are pleased that action is being taken which will ensure those with a second home in East Suffolk will contribute towards the council services they receive.”

Minister 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.”

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