SECOND HOMES CONSULTATION LAUNCHED

Department for Local Government launches a review of the business rates loophole

Hot on the heels of the Chancellors Budget, and as reported by the East Suffolk Lib Dems on the 7th November, the Department for Local Government has take up the challenge lead by local Liberal Democrats and has launched a review of a business rates loophole which has allowed the owners of some second homes to register as businesses, claiming their property is available for "holiday accommodation" for part of the year.

This follows a long running high profile campaign by newly elected David Beavan and Southwold Lib Dems to get a change in the rating system and close the loophole.

Speaking at the East Lib Dems Annual Meeting at Beccles on Saturday, David welcomed the government announcement. He said: "I am glad the government is looking at this. It should have been reviewed years ago. In Southwold, where 60% of the properties are second homes too many are just left empty for almost all the year and do nothing except push up property prices. The average house in Southwold now costs 20 times the average salary - making it totally unaffordable for most people. Cllr Beavan said, " We welcome those who live here much of the time or those who run real holiday lets - they bring a lot of money into the area, but we expect everyone to pay their fair share of tax". "We hope that all who share this view will respond to the Government Consultation.

One of the options being proposed by the Government is: 'to allow a property to be liable for business rates rather than council tax only if it was actually commercially let as self-catering accommodation for short periods totalling at least 70 days'.

The Lib Dems feel that this period is still inadequate and will be pushing for at least 105 days.

The Consultation also offers a potential loophole 'for business owners with multiple holiday lets at the same location or within very close proximity. The Consultation continues 'To assist these business owners in meeting the criteria, one option would be to allow such owners to use the average number of letting days across their properties when establishing whether the 70-day criterion is met'.

Local Government Minister Rishi Sunak MP said: "We're aware of concerns that the current arrangements for valuing second homes for business rates and claiming relief do not provide strong enough protections against abuse."

The Consultation Document adds:

The Government is concerned that owners of properties that are not genuine businesses may reduce their tax liability by declaring that a property is available for let, but making little or no realistic effort to actually let it out. It has been suggested, for example, that a property-owner may restrict the periods during which bookings can be accepted, ask for unrealistic rents or fail actively to market the property at all.

In light of these concerns, the Government proposes to strengthen the criteria for a holiday let to be liable for business rates.

One such option could be to allow a property to be liable for business rates rather than council tax only if:

• a) In relation to the year being considered, the property will be available for letting commercially as self-catering accommodation for short periods totalling at least 140 days;

• b) During the year immediately prior to the year being considered, the property was available for letting commercially as self-catering accommodation for short periods totalling at least 140 days; and

• c) During the year immediately prior to the year being considered, the property was actually commercially let as self-catering accommodation for short periods totalling at least 70 days.

The government consultation runs until January 16 2019 and people can have their say by visiting the Department's website.

This consultation closes at 11:59pm on 15 January 2019

Consultation Description

The consultation paper considers options to strengthen the criteria for holiday lets to be liable for business rates, and therefore potentially at a financial advantage due to the small business rate relief scheme.It will be of particular interest to owners of holiday lets, trade representatives of the self-catering and tourism industry and local authorities.

TO READ THE FULL CONSULTATION DOCUMENT

Reference Business rates treatment of self-catering accommodation

Ref: ISBN 978-1-4098-5350-3 PDF, 331KB, 11 pages

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