Closure of tax loophole for second home owners in Cornwall branded as 'nonsense'
A local councillor and housing campaigner doesn't think the move will work
Last updated 14th Jan 2022
It is feared that the 'closure' of tax loophole for second home owners in Cornwall will not be effective.
The government has announced that new rules will come into force from April 2023.
Second homeowners will have to provide hard evidence that their property is let out to holidaymakers in order to qualify for business rates.
If a property owner can prove that their property has been let for at least 70 days a year and has a rateable value of less than £12,000 then they can still qualify for business rates relief and avoid paying council tax.
Previously second home owners only had to indicate that they intended to let the property to holidaymakers to qualify for business rates but under the new rules announced today they will have to prove that they have been rented out by giving details of a website or brochure where the property is advertised, letting details and receipts.
Andrew George is a local councillor and housing campaigner in west Cornwall, as well as a former MP for the area.
He told us: "Because they are only saying that people who use this tax loophole have to demonstrate that they have let their properties for 70 of the 365 days of the year, I'm arguing that this has no effect anyway, this isn't going to close the loophole.
"It doesn't say who they need to let these properties to, it could be family and friends, it doesn't have to be in the summer months, you could pick 70 days during the winter at a very low rate, it's nonsense anyway, it looks purposeful and it makes them look as if they're trying to deal with the matter.
"The simple fact is they should be trying to claw money back from the people who have been taking advantage of this over many years.
"The proof of the pudding will be in the eating of this policy in 2023 and I reckon that by the end of that year you won't see any significant reduction in numbers, that's my prediction."
Other officials are, however, welcoming the move saying it is a great step forward but that more still needs to be done.
Commenting, Cllr Olly Monk, Cabinet Member responsible for Housing and Planning at Cornwall Council said: “Today’s news from the Government that people who own second or holiday homes in Cornwall will no longer be able to automatically claim business rate relief unless they prove that the property is actually used a business is a great step forward and a vindication of what we have been trying to achieve since taking office May 2021.”
“These measures will mean that any unscrupulous second home owners who were getting away with paying council tax or any business rates will now either have to deregister their properties and pay council tax (like everybody else) or provide sufficient evidence that their property is actually ran as a business.”
“We still have more to do and will continue to work with the Government to lobby for additional powers, including those ensuring that any properties not used as a primary residence will have to apply for a license/planning and also to give Cornwall Council the ability to charge a surcharge on the Council tax bills of second homes. However this shows that our Government in Westminster are listening to Cornwall and are prepared to take action that will help with the our current Housing Crisis.”
Leader of Cornwall Council Linda Taylor said: “Today’s announcement is fantastic news for Cornwall and a good step forward in making sure everyone contributes fairly to council services by paying rates that are appropriate to their properties.”
“This is something Conservatives on Cornwall Council have long called for, and since taking over the council in May last year, Cornwall Council has joined with our six Cornwall Conservative MPs in making the case to Government.”
“I am pleased the Government has listened and taken this sensible step. We will continue to work with our MPs and the Government to work towards further addressing these issues, to ensure everyone pays their fair share and also help address our housing crisis.”
St Austell and Newquay’s Member of Parliament Steve Double has been campaigning for this change to be made since 2018.
He said: “The unfair loophole that some second home-owners had been taking advantage of to avoid having to pay domestic or business rates is something that I have been working with the Government to close for some time.
“It is one of the top issues raised with me by local residents and I am delighted that the Government has listened and after consulting, is making these sensible changes which will ensure that this loophole is closed and some second home-owners are no longer able to unfairly benefit from this.
“I acknowledge there is still much more to do but closing this loophole is an important step in ensuring second home-owners fully contribute to the provision of local services. I look forward to continuing to work with the Government and Cornwall Council on further steps, such as the introduction of a register for holiday lets, in the near future.”
Cherilyn Mackrory, MP for Truro and Falmouth added: “I care passionately about ensuring our housing crisis in Cornwall is addressed, and one of the things I have campaigned on since the time I was a Cornwall Councillor is addressing the unfair loophole that some people exploited to avoid paying rates on their second homes.”
“Today’s announcement by the Government helps address this and is a good step forward. There is a lot more to do though, and I will be working with my Cornish MP colleagues and Cornwall Council to continue to press the case for more powers for Cornwall Council to ensure second homes do not continue to negatively impact on our communities here in Cornwall.”