Council Tax Premium Plan for Second Homes Gets Mixed Reception

A plan to tackle the affordable housing crisis in North Yorkshire by doubling the council tax charge on second homes has received a mixed reception.

Some critics have claimed the move could reduce payments to the public purse while also failing to free up properties for local residents.

North Yorkshire County Council has said the proposal to introduce a 100 per cent council tax premium to all second homes in the county from April 2024 will depend on the government passing legislation in the coming months.

The move would double an average band D council tax charge for second home owners to more than £4,100 in some of the most heavily affected areas of the county.

Announcing the proposal, the authority stated it had potential to generate an annual £14m windfall to fund services and affordable housing schemes, funding for which the North Yorkshire Rural Commission identified as a significant challenge.

About half of the “windfall” would come from properties in Scarborough district, and a further large proportion from Richmondshire, which the county council has stated would be shared with all precepting authorities, such as police, rather than ploughed directly back into the most affected areas.

A report to a meeting of the council’s executive, which is considering the proposal on Tuesday, warns that numerous concerns have been raised whether the second homes premium might encourage council tax premium avoidance, with owners transferring properties to holiday lets to qualify for discounted business rates.

The proposal has been met with open hostility by some who say it has potential to flood the housing market with properties, devaluing homes and undermining the viability of businesses which depend on second home owners.

County council Independent group leader Councillor Stuart Parsons described the move as

“one of the stupidest suggestions the Tories have ever come up with”, adding it would cause more damage than good as there would be “so many loopholes people could dodge out of paying the premium as they wish”.

Restricting the premium to second homes rather than holiday lets would simply lead to the creation of “a multitude of small companies”, he added, to which owners would pay a small nominal fee to themselves to stay at their properties.

Coun Parsons predicted the authority would see a net loss in council tax as a result and that a levy limited to 100 per cent more council tax would be “pass vaguely unnoticed” by many second homeowners.

Other local politicians have claimed some areas of the county are suffering more due to holiday lets than second homes.

Nevertheless, Councillor John Amsden, chairman of planning in Richmondshire district, said while he welcomed action, the proposed premium would be “a non-starter unless you can pin a property’s ownership down”.

He said:

“It is a step in the right direction, but the problem is now local people cannot afford many of the properties due to a rise in demand, particularly in areas with good broadband connections, after the pandemic.

“Why should we have to suffer depopulation, see our infrastructure like schools and roads dwindle and watch hospitality industry struggle to find staff due to people wanting a second home?”

Upper Dales councillor Yvonne Peacock, whose drive to introduce a council tax premium on second homes was rejected by Richmondshire District Council four years ago, said she was “absolutely delighted” by the county council’s proposal.

She said the premium would bring some rarely used second homes on to the market as “people don’t like paying over the odds for anything”, while the funding it would generate would overcome one of the biggest obstacles to building affordable houses.