Live and campaign in an area with a lot of second homes?

East Suffolk Liberal Democrats are campaigning against a loophole that allows second home owners to avoid paying rates by saying they are businesses. A second home, that is available for holiday lets for 140 days a year (they don’t have to actually let it, except in Wales!), can claim to be a business for rates, and all properties of less than £12,000 valuation receive 100% small business rate relief – so they pay nothing. (NB this is not the same as Furnished Holiday Lets.)

In Southwold, more than half the houses are second homes and local people are priced out of the market. More houses are being built but they are selling at £500,000 each and a local Tory councillor allowed the developer to drop the six affordable homes for £170,000.

This loophole increases house price even more for locals who have to pay council tax. It also costs the council about £500,000 a year in lost revenue.

David Beavan, who came second to the Conservatives in the county elections and is standing in next year’s District Council elections next year, said;

It is unfair that people with no homes should be subsidising people with two homes. We are not against second homes, but it is time to put a break on their spread before the community is destroyed.

The East Anglian Daily Times last week covered the story last week on its frontpage, two inside pages and editorial backing.

It would be great if other Liberal Democrat groups in holiday areas could add their voice to this campaign. If you want chapter and verse on the regulations, email me at [email protected]

See who claims business rates relief in your area here.

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3 Comments

  • Small business rate relief scheme (SBRR) is a national discount scheme administered by local authorities on behalf of the Government. It is awarded on a sliding scale depending on the size of your Rateable Value (RV).

    The maximum amount of discount is 100%. From 1/04/2017, businesses with a property with a rateable value of £12,000 and below receive 100% relief. Businesses with a property with a rateable value between £12,001 and £14,999 receive tapered relief.

    Currently, if the rateable value is £12,000 or less, you get a 100% discount;If the rateable value is between £12,0001 and £14,999, the discount is calculated on a sliding scale. For example, you will get a 50% discount if your rateable value is £13,500. If your rateable value is £15,000 or over, no Small Business Rate Relief is awarded.

    I think the issue raised in this article is a valid one. If second homes are genuine furnished holiday lets that meet the HMRC criteria then they are rightly classed as businessess. The crieria for FHL’s is:
    – The property must be situated in the UK (or elsewhere in the EEA) and let furnished with a view to a profit
    – The property must be available for letting for at least 210 days in the tax year and must be actually let for at least 105 days
    – The property must not be in longer-term occupation (i.e. occupied by the same person for more than 31 consecutive days) for more than 155 days during the tax year.

    If this criteia is not met than SBBR should not be available and business rates should be assessed on the full rateable value if the property is registered as a business or to council tax if not.

    ALTER (https://libdemsalter.org.uk/en/) advocates the assessment of all second homes not occuopied as a principal private residence to business rates with SBBR relief mae available to small Landlords where appropriate.

  • Peter Martin 17th Apr '18 - 2:52pm

    It’s immoral for people to have multiple homes when some don’t have any. But that’s just my more socialist POV. In a ‘Liberal’ society anyone can have as many as they want to to buy.

    On the general question of house prices its interesting to Google the words “credit” and “crunch” and see just how often those terms crop up under ‘news’. They are stating to be used again both here and other places too like Australia and New Zealand. So it’s not particularly that Brexit is causing the problem. Unless the Brexit fall out is reaching as far as ‘down under’.

    What tends to happen is that governments and central banks start to notice that levels of private sector borrowing are becoming excessive. They they push up interest rates. (Note how they rose just before the 2008 GFC) That doesn’t quite work as intended. It just makes it obvious to everyone that the bubble in asset prices, like housing, isn’t going to inflate any further. So banks naturally become much more wary in their lending which further flattens the market further. Fairly quickly we have what has come to be known as a ‘Minsky moment’ when prices threaten to collapse completely and everyone runs around like scalded cats wondering what to do next. After the last ‘Minsky moment’ in 2008, interest rates were slashed to zero to keep the bubble inflated.

    If it happens again we’ll be well and truly stuffed! Interest rates can’t fall any lower.

    https://commons.wikimedia.org/wiki/File:UK_interest_rates,_May_1997_to_present.svg

  • John Marriott 17th Apr '18 - 3:27pm

    @Peter Martin
    You can argue the morality of people having multiple homes. What is more of a scandal in my opinion is people buying up homes built specifically for first time buyers and then renting them out as ‘an investment’. TV programmes like ‘Homes under the Hammer’ have a lot to answer for.

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