Understanding Council Tax on Second Homes: What You Need to Know
New laws change council tax for second homes in England. Homeowners and investors face higher costs. Starting April 2025, many local councils add a tax increase on homes that are not main residences. Costs may double for these owners.
New Laws for Council Tax on Second Homes
In early 2024, lawmakers allowed local councils to add a tax premium of up to 100% on second homes. A home qualifies as a second home when it is furnished and not used as the main residence. This change aims to ease local housing demands and stop local buyers from losing their homes. Homeowners might see their annual council tax rise from about £2,171 to £4,342 beginning in April 2025.
Over 150 local councils plan to use this premium. Locations known for holiday homes, such as Cornwall, South Hams, and Cumberland, may face the highest increases. Local housing needs keep rising, which brings these changes closer to home.
The Financial Implications for Property Investors
Property investors now face more costs. Stamp duty costs rise, and mortgage interest relief for buy-to-let properties falls away. In March, property owners must check their new tax bills for the changes that start in April. Investors must update their financial plans to cope with higher bills.
Investors should check if their local council votes to add this extra tax. Many councils, such as Bath and North East Somerset, East Devon, and North Yorkshire, already plan to raise taxes on second homes. People can enter their postcode on the UK government portal to see their local council rules.
Types of Properties Under Council Tax Guidelines
A second home is usually a furnished property not used as a main residence. Some definitions cause much confusion. In Pembrokeshire, one basic dwelling saw a triple tax rise even when it was nearly unfit for daily life.
Buy-to-Let Properties and Council Tax
Buy-to-let investors see different rules. Usually, tenants pay the council tax, not the owner. If the home is a House in Multiple Occupation (HMO), the owner might pay tax. In that case, the owner may collect the paid tax from rent.
Empty and Holiday Let Properties
Homes that stay empty face extra costs. If a home stays unfurnished for 12 months, a local council may add a premium. The extra cost may range from 100% to 300% based on how long it stays empty.
Holiday let properties have an alternate rule. If a home is listed as a holiday let, it may not have council tax. Instead, it pays business rates. In England, to count as a holiday let, the home must be available for renting at least 140 days a year and actually rented for 70 nights.
Key Considerations for Second Home Taxation
How much tax one pays on a second home will depend on where the home is, its tax band, and any discounts. Many councils now choose the new tax method. Homeowners should expect a rise in their costs.
Some exemptions exist but are few. If tax costs make owning a property too hard, selling may be the best path. Changing a second home into a holiday let may stop the extra tax, but rules on usage apply.
Investors should also know that changes starting in April will affect the tax relief on furnished holiday lets. Future changes in capital gains taxes may also affect these properties. Check the new rules before deciding to sell.
Conclusion
Local councils now plan to start the extra council tax for second homes in April 2025. Homeowners and investors must stay informed. These changes touch many parts of property ownership. Understanding your local rules and planning for the future now help when the market shifts.
Sources:
- MoneyWeek second home council tax article
- Local Government Chronicle
- Zoopla Property Insights
For extra help, contact your local council or the Valuation Office Agency to clear up any doubts about your council tax.
Disclaimer: This article has been generated by AI based on the latest news from Google News sources. While we strive for accuracy, we recommend verifying key details from official reports.
