Cornwall plots to close second homes council tax loophole

Telegraph

10-04-2025

Cornish MPs are plotting to close a loophole which allows second home owners to avoid paying higher council tax.
It comes after the coastal county introduced a 100pc council tax premium on second home owners on April 1 – leaving some families facing £5,000 a year bills.
Second home owners who rent out their property as a holiday let for 70 nights a year can qualify for business rates – and those with just one property are likely to qualify for further tax relief.
Unlike council tax, business rates are not based on bands. Rather, they are calculated based on the property's 'rateable value', and can typically work out cheaper than council tax.
Ben Maguire, the Liberal Democrat MP for North Cornwall, who is leading the charge against the tax loophole, said: 'I have dubbed it the 'Airbnb Bill'.'
The Telegraph understands that the main focus of the policy will be on closing the business rates loophole, which allows second home owners to become short-term lets and avoid council tax.
Mr Maguire said the bill was two-fold: 'Number one is to force second home owners to apply for planning permission when they want to turn their second home into a holiday let.'
This is already the case in Gwynedd, north west Wales, which introduced planning permission for new holiday lets and second homes last year, under 'Article 4' rules.
He added: 'The second part of the bill is if you are changing your home from a residential permanent occupancy property, to a non-permanent second home, you will also need to apply for planning permission.'
Mr Maguire and other Cornish MPs, including Andrew George MP for St Ives, Noah Law, the Labour MP for St Austell & Newquay, and Anna Gelderd, the Labour MP for South East Cornwall, met housing minister, Matthew Pennycook, to discuss their proposals last week.
More than two thirds of town halls opted to impose a 100pc council tax premium on second homes from April 1 under powers granted in the Levelling Up and Regeneration Act.
The powers were introduced by former Conservative cabinet minister, Michael Gove, to protect housing stock in popular holiday destinations and coastal towns.
There are 13,140 second homes in Cornwall, according to the local authority, of which 2,652 are categorised as long-term empty.
Council tax on a Band D second home is now £4,919.84, or more than £400 a month, after an increase of 4.99pc this year and the introduction of the 100pc premium.
But second home owners have claimed that they weren't properly warned about the changes, which were advertised in local newspapers they don't read.
The Telegraph last month revealed that MPs would be spared the premiums as allowances would rise to cover the tax bills.
Mr Maguire said: 'You've got housing developments in places like Bodmin, a quite low socioeconomic town, historically, and you're actually finding now, even in Bodmin, lots of the big developments are becoming second homes, lots and lots of them.'
Andrew George, the Liberal Democrat MP for St Ives, said that he had pointed out how the small business rates relief could be used as a loophole for second homes as long ago as 2012.
He said: 'I highlighted then how it could attract second home owners to flip from council tax to business rates, and indeed that happened at a relatively industrial scale.'
Mr George will meet with Treasury ministers in the coming weeks to discuss the business rates loophole after raising it in the House of Commons.
He also supported a registration scheme for short-term lets – which the Ministry of Housing said last August would be introduced 'as quickly as possible' – and offered the county as a pilot.
He said: 'We've offered to pilot the registration scheme. I don't think it is one that you would necessarily want to roll out as a complete scheme.'
John Brown, head of the Cornwall Chamber of Commerce, said: 'We're dealing with a surplus, not a scarcity, of Airbnbs.'
'This isn't a fight between tourism and housing, but it is an addressing of and a bit of a rebalance.'
Mr Brown said he didn't think the policy would push up prices for tourists, and added: 'The balance won't have an impact in terms of the actual pricing, or pricing tourists out of Cornwall. There's no two ways about it, it's not a cursory spend to come and spend time in Cornwall.'
But chief executive of the Short-term Accommodation Association (STAA), Andy Fenner, said: 'I've met with local MP's, and explained the real-world contribution of short-term rentals – yet they seem more interested in grabbing headlines than solving the housing crisis.
'We're calling on the Government to support tourism and those who work in it, not scapegoat our sector for the failure to build enough homes.'
In Wales, the strict rules precipitated the biggest fall in year-on-year house prices, with Gwynedd seeing a drop of 12pc, according to the Principality Building Society.
A Ministry of Housing spokesman said: 'We are determined to fix the housing crisis we have inherited, and we know that having excessive concentrations of second homes and short-term lets in an area can drive up housing costs for local people and damage local services.'
The spokesman said the Government was considering further action on short-term lets and second homes.
Cornwall County Council declined to comment due to upcoming local elections.