0
Property tax raid FAILS as councils face losing £383million despite charge on second homes
May 3, 2026
Posted 1 hour ago by
The Government's attempt at a tax raid on second homes is forecast to significantly backfire as councils face losing hundreds of millions in pounds.Local authorities across England and Wales risk losing an estimated £383million as owners of second properties continue to sidestep double council tax charges, according to new analysis from property consultancy Colliers.The projected shortfall represents a £49million increase compared with the £334million lost during the previous financial year.Property owners are taking advantage of a gap in the system by converting their second homes into short-term holiday rentals, which allows them to escape both the standard council tax bill and the additional premium now levied by most councils.By registering their properties as holiday accommodation, these owners become eligible for business rates instead, which often prove significantly cheaper than the combined council tax charges they would otherwise face.To qualify as a holiday let under current rules, a property must be made available for at least 140 nights annually and actually rented out for a minimum of 70 nights.Once these thresholds are met, owners can register for business rates rather than council tax, with many becoming eligible for complete relief from any charges whatsoever.Colliers estimates that 77,241 holiday let properties will benefit from 100 per cent business rates relief during the 2026-27 financial year.LATEST DEVELOPMENTSDWP paying businesses £3,000 to hire young people amid youth unemployment surgeHMRC's income tax threshold freeze — how fiscal drag is costing workers thousandsState pension 'shock' as ONE MILLION retirees 'dragged into tax system' under HMRC ruleThis full exemption applies to single-property owners, with the relief rate gradually reducing to zero for properties with rateable values between £12,001 and £15,000.Business rates calculations are based on a property's potential rental income, physical size, and geographical location.John Webber, a rates expert at Colliers, condemned the approach as a short-sighted policy that actively encourages property owners to reclassify their homes as holiday lets.He said: Most people will happily pay what they have to pay, but the politics of envy is forcing people to move to business rates once they meet the criteria government policy means they will then pay nothing.
We blame the Government for this, not people with second homes. Josephine Ashby, the managing partner at John Bray Estates described the double council tax charge as unfair, noting that some owners have inherited properties they cannot sell yet now face the premium.Cornwall councillor Peter La Broy took a harder line, arguing that anyone converting their home into a holiday let to dodge taxation should be ashamed of themselves and backing premiums of up to 200 per cent alongside mandatory planning permission for such conversions.Housing minister Matthew Pennycook has indicated that additional powers for councils regarding short-term lets and second home taxation are under review, suggesting Labour may move to address what has been described as a gaping tax loophole. The double council tax premium was introduced under the previous Conservative government in April last year, with Welsh authorities permitted to charge up to 300 per cent.A Local Government Association spokesman emphasised the desperate need for more affordable housing across the country, adding that councils require all options possible to ensure a supply of homes for rent and sale that meets local needs. Our Standards: The GB News Editorial Charter
GB News
Coverage and analysis from United States of America. All insights are generated by our AI narrative analysis engine.