Council faces £100,000 tax bill as its ban on second home owners makes its new flats in multi-million-pound seafront development unsellable
Bosses have been forced to lift the restriction on the flats in Hunstanton which were intended to go on the market - for local people only - in December 2023.
But the 'embarrassing' failure to shift a single one of the 32 apartments has forced West Norfolk Council to lift its restriction on selling accommodation to people whose principal homes are elsewhere.
The block of flats - called Styleman Court - were built by the council and part-funded by Homes England.
But as the coalition-led authority has failed to secure a single buyer it risks blowing a further hole in its finances if the disused accommodation triggers its own empty homes premium.
It is understood the council would be liable to pay a double tax bill close to £100,000 for the empty properties.
If buyers are not found by February 2026, the empty homes premium will come into full force.
Fearful officials subsequently lifted the ban on second home owners in a behind-closed-doors meeting last month.
The Local Democracy Service reported Simon Ring, deputy leader of the council, said: 'If the properties are still empty in a year's time, we will suffer the empty homes tax, which will be like being hoisted by our own petard.'
Leaders have been said to show reluctance towards offering mortgages on the seaside flats as they fear it would make them unsellable in the future due to buying restrictions.
Confidential papers seen by the Local Democracy Service state removing the conditions would boost the value of each by an average of £39,500.
A spokesman for the council said: 'The restriction was introduced to ensure that people who bought the homes lived in them. However, this had the unintended consequence of making it harder for local people to buy the flats because it affected mortgage availability.
'While accepting that it also means people can buy the flats as holiday homes, the removal of the restriction is primarily intended to make it easier for local people to purchase them.'
Independent councillor, Paul Beal, told The Telegraph: 'It's a lesson that's been learnt and a mistake can't happen again. The flats are built on a car park ... No one wants to live there full time.
'But as a holiday home destination, I think it would be fantastic. It's half a minute from the beach and you're two minutes from the town.
'Hunstanton was built for tourism, it is purely a tourist town and that's the way it has to be. It's our biggest industry so we should embrace it.'
Another councillor said the failure to secure a single buyer after 19 months was 'embarrassing'.
It comes as construction costs for the project have gone almost £2m over budget - believed to be the result of delays and the rising cost of materials.
The council did not comment further on the figure on account of it being published in a private report.
Six of the apartments are due to be kept by the council to be used as social housing.
The rest are scheduled to go back on the market without the ban on second home ownership.
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