Lib Dems Plotting Council Tax Hike For Second Homes

[athom]

Owners of second homes could be stripped of their council tax discount under Liberal Democrat plans to raise millions of pounds for town halls.

Danny Alexander, the Lib Dem Chief Secretary to the Treasury, is among ministers who back ending rules that force local authorities to cut bills by 10 to 50 per cent for owners of weekend bolt-holes. In a Commons motion, the Lib Dem president, Tim Farron, suggested the cost of providing the discount could be spent on local services or cutting council tax bills for all.

While the tax-raising powers would chime with the Conservatives' localism agenda, it risks angering thousands of traditional Tory supporters who own holiday homes.

There are currently 246,000 second homes registered for a discount in England, of which more than 40 per cent are larger properties in Band D or higher. Around 50 councils allow second-home owners to pay just half the tax of locals, though since 2004 some 85 councils have reduced their discounts from 50 per cent to the minimum 10 per cent.

Deep cuts are being made to central government funding as part of the coalition's spending review, with an 11 per cent reduction ordered for next year alone. Town halls are also under pressure not to increase council tax across the board to fulfil a Tory pledge of a freeze in bills for two years.

But the threat to services posed by the cuts has led to calls for the second-home discount to be scrapped, as it has been in Wales. Councils could be missing out on more than £50m a year, while countryside campaigners have long warned of the impact on villages where services such as schools and post offices struggle to survive without permanent residents.

Mr Farron, whose Cumbrian constituency has more than 3,800 second homes, claims their owners are being bankrolled by poorer local residents. He said: "People living on council estates, maybe working on the minimum wage, are subsidising the council tax of a barrister from Manchester with a second home in the countryside. We are having to put up taxes, scrap certain benefits... it is a case of social justice."

In Cornwall, for example, there are 14,000 second homes receiving a 10 per cut in bills. If this were abolished, it could raise £2m a year. In the meantime, the county's unitary authority is taking radical action to meet the cuts, including a fire sale of assets such as car parks and disused toilet blocks.

Durham County Council offers a 50 per cent discount to almost 2,000 second-home owners, which could be costing it £1.5m a year, while Suffolk Coastal District Council could be missing out on £2m.

A review of council powers by the Department for Communities and Local Government, due in the new year, is to consider giving councils the power to charge second-home owners the full rate of council tax. But some Lib Dems want to go even further, and stand by their manifesto commitment to "give local authorities the power to set higher council tax rates for second homes and the option to require specific planning permission for new second homes, in areas where the number of such homes is threatening the viability of a community".

Before the election, Lewes District Council, in East Sussex, and Islington Council, in north London, called for legislation to allow councils to "set increased council tax rates for properties kept solely as second homes or used as holiday lets". This was considered by the Labour government but rejected before polling day.

In June, the coalition increased capital gains tax paid on profits made from asset sales such as shares and second homes to 28 per cent for top-rate taxpayers in a move that David Cameron said was in part done to take aim at people who buy holiday homes as an investment. "There is a very big difference between the capital gains someone pays on, say, a second home and actual investment in business assets," the Prime Minister said in May.

http://www.independent.co.uk/news/uk/politics/lib-dems-plotting-council-tax-hike-for-second-homes-2145638.html

Should see a few come onto the market then but i can't imagine many will take large price drops or it will seem more economical to keep hold of them and pay up, assuming they remain bullish for the mid term. Those in tight circumstances and the bearish would probably sell already anyway.

[wherebee]

another unenforceable idea.

deckchairs..titanic....etc

[PhoneyMcRingRing]

"....ending rules that force local authorities to cut bills by 10 to 50 per cent for owners of weekend bolt-holes"

Ending a rule is pretty east to enforce IMHO. It will only have a minor impact but does send out the right message.

P

[Tired of Waiting]

"....ending rules that force local authorities to cut bills by 10 to 50 per cent for owners of weekend bolt-holes"

Ending a rule is pretty east to enforce IMHO. It will only have a minor impact but does send out the right message.

P

+ 1

[Fawkandles]

A libdem policy I like.That and the tax cut for the poor.

[dubsie]

It's a good idea, would shouldn't encourage second homes when so many need homes to live in. Having two homes is a luxury and be taxed that way.

[Pauly_Boy]

Fantastic idea, infact I think council tax should be doubled on a 2nd home!

[blankster]

Hitting second home owners with extra council tax is rather arbitrary.

Here's why: one person might have a tiny flat in London and a small terraced house in, say, Wareham in Dorset.

The combined value of the flat and house might be £300K and the owner has to pay extra tax - whereas somebody who owns a £600K house in Wareham, but no other properties, wouldn't have to pay the premium and would probably have a lower council tax bill anyway.

In summary, why should someone who owns and uses two small homes pay a council tax premium when they already pay more than someone else who owns one big home?

Edited November 28, 2010 by blankster

[hpc-craig]

Good. It's about time.

On the website of the local newspaper, they had an article about second home ownerships (part of our county has A LOT of them) I suggested that not only should council tax discount be scrapped, but councils should be charging 200 - 500% council tax to second home owners and second home owners are not allowed to block planning applications in their locality.

Well I was shot down from all directions. The main criticism being 'they use less services from the council so should pay less'. However, they are a burden on local councils as the council ends up having to house the people that are priced out of the market by the second home owners.

In my opinion, an inflated council tax (say £3500 a year to a council charging 250% tax) would deter the people who can't really afford a second home (show off at the dinner table types) and would ensure that house prices didn't soar, allowing locals to buy. There will still be people who can actually afford a second home and want one regardless of the higher council tax, and the extra money raised by the increased tax SHOULD be used by the council to build quality housing in the local area.

[blankster]

people that are priced out of the market by the second home owners.

These are mostly people who were never 'priced in' to the home ownership market and would have lived in farm cottages / council houses / with extended family in the past.

[interestrateripoff]

Given that councils currently have the right to offer a discount of anywhere between 10% and 50%, there must be many who are not choosing the lowest available discount of just 10%.

Why not? Who are they? Is there a list anywhere, so that local people can lobby their local council.

Good point.

Why is there such a large variation in what can be discounted?

[jammo]

Hitting second home owners with extra council tax is rather arbitrary.

Here's why: one person might have a tiny flat in London and a small terraced house in, say, Wareham in Dorset.

The combined value of the flat and house might be £300K and the owner has to pay extra tax - whereas somebody who owns a £600K house in Wareham, but no other properties, wouldn't have to pay the premium and would probably have a lower council tax bill anyway.

In summary, why should someone who owns and uses two small homes pay a council tax premium when they already pay more than someone else who owns one big home?

You are right, people who own £600k mansions should be taxed heavily as well.

[Executive Sadman]

A libdem policy I like.That and the tax cut for the poor.

The trouble with libdem tax policies is theyre all for raising the threshold for PAYE, but want to make it up by raising tobacco duty, fuel duty, alcohol duty.

Because the poor dont smoke, use fuel, or drink beer

Relatively, a lot more of their income goes on those things. Its just shifting things about.

[quine]

Good.

I've owned two properties outright and I think this tax is well overdue.

[Radge]

Hitting second home owners with extra council tax is rather arbitrary.

Here's why: one person might have a tiny flat in London and a small terraced house in, say, Wareham in Dorset.

The combined value of the flat and house might be £300K and the owner has to pay extra tax - whereas somebody who owns a £600K house in Wareham, but no other properties, wouldn't have to pay the premium and would probably have a lower council tax bill anyway.

In summary, why should someone who owns and uses two small homes pay a council tax premium when they already pay more than someone else who owns one big home?

Because the owner of the £600K house in Wareham isn't depriving the local in Dorset of a home?

Edited November 28, 2010 by Radge

[Democorruptcy]

Councils should just apply a simple formula for multiple home owners that applies to every property they own

homes owned x the highest council tax rate they pay

3 homes with council tax at £3k, £2.5k and £2k they pay £9k council tax on each home. That would help reduce the number of empty properties.

[SarahBell]

Councils should just apply a simple formula for multiple home owners that applies to every property they own

homes owned x the highest council tax rate they pay

3 homes with council tax at £3k, £2.5k and £2k they pay £9k council tax on each home. That would help reduce the number of empty properties.

but mr smith with put mrs smith's name on one and pay less.

I think empty properties should be taxed in a way that ediscourages them.

The tax breaks have been obscene on them.

[Self Employed Youth]

The IFS report linked to on here but a week ago contained the proposals of ending such discounts. And applying a VAT style tax to housing/commercial property and land via council tax/biz rates or some similar form of 'rates' which have previously existed.

The main concern was to tax land more fairly, but to do so in a way which would not create big winners/losers.

[Democorruptcy]

but mr smith with put mrs smith's name on one and pay less.

I think empty properties should be taxed in a way that ediscourages them.

The tax breaks have been obscene on them.

Apply it to all properties owned by spouses etc.

10 years in prison for someone spending a night in a property they aren't paying the required council tax rate on and 20 years for an accountant who facilitates council tax evasion.

[winkie]

Hitting second home owners with extra council tax is rather arbitrary.

Here's why: one person might have a tiny flat in London and a small terraced house in, say, Wareham in Dorset.

The combined value of the flat and house might be £300K and the owner has to pay extra tax - whereas somebody who owns a £600K house in Wareham, but no other properties, wouldn't have to pay the premium and would probably have a lower council tax bill anyway.

In summary, why should someone who owns and uses two small homes pay a council tax premium when they already pay more than someone else who owns one big home?

...because smaller homes are in more demand to the people who are priced out.

[LiveinHope]

These are mostly people who were never 'priced in' to the home ownership market and would have lived in farm cottages / council houses / with extended family in the past.

Then who would have lived previously in the houses that are now rural second homes ? They certainly haven't been built to meet demand.

Edited November 28, 2010 by LiveinHope

[SarahBell]

Countryside pro BBC 1 tonight showed village school in Flash with only 7 kids. Is that cos it's all holiday cottages now?

[Stars]

We need a more general and fundamental reform to the tax system so that the more valuable space you occupy with ownership, the more tax you pay. Such a tax is the LVT (land value tax)

Edited November 28, 2010 by Stars