Crackdown on second home owners exploiting tax loophole on coast

David Beavan on the pier in Southwold.

David Beavan on the pier in Southwold. - Credit: SARAH LUCY BROWN

Free council services including waste collections may be taken away from second home owners exploiting a loophole to escape paying council tax or business rates.

A legislation loophole currently exists where people who own a second home register as a holiday let business to avoid paying council tax, but then make no efforts to let the home.

As businesses with a rateable value of less than £12,000 get a business rates relief of 100pc, it means the homeowner effectively gets away with paying neither council tax or business rates.

The problem has been a key one in east Suffolk’s coastal hotspots, including Southwold, exacerbated by people travelling from London to their second homes during the Covid-19 pandemic.

While the Government said it is aware of the loophole and is working to close it down, East Suffolk Council on Wednesday night unanimously agreed a motion for immediate measures.

That motion will mean any home registered as a business will be required to pay commercial waste collection and not be allowed free household bin collections, as well as barred from using resident parking spaces and household waste recycling centres.

steve gallant

Councillor Steve Gallant. - Credit: East Suffolk Council

Conservative council leader Steve Gallant, who bolstered a motion by Southwold's Liberal Democrat ward member David Beavan, said: “I am aware of the behaviour of some individuals who seek to use a loophole in the current legislation to line their own pockets with scant regard for the effect this has on both our council and our residents.

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“Those that choose to opt out of council tax should not avail themselves of the services that we as a council provide to our council taxpayers.

“If an individual home is registered as a business then it should be treated as a business, for instance if they want waste collection then they should be paying a commercial rate – they are a business.”

Other areas which could be used to clampdown on those seeking to subvert the system could be food standards visits or fire inspections.

Cllr Beavan, who has long campaigned for progress, highlighted one example where a London resident regularly travelled to Southwold during Covid, where he has a home registered as a holiday let that had no customers last summer.

Cllr Beavan said: “If he wants to escape rates, he should register with HMRC as a furnished holiday let and show evidence of actually letting.

“This is not a party political matter, it is about decency and fairness.

The loophole reflects badly on all second homers and divides our communities.

“This is going to be hard enough winter for local people, many of whom can’t afford one home, without having to subsidise these fraudsters with two homes.”

A neighbourhood plan being drawn up in Southwold and Reydon includes provision to ensure that all new homes are for principal residents only, meaning new homes will not be allowed to be used as second homes.

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