Second Homeowners Face a Big Council Tax Jump in 2024
Local councils now use new rules that let them add a tax premium on extra homes. These rules affect second homes and properties for rent. The changes start when council tax bills come this month. Stakeholders in the housing market, especially those in Houses in Multiple Occupation (HMOs), need to note the coming cost rise.
New Law and Tax Premiums
Early 2024 gives local councils power to add a tax premium of up to 100% on homes that are not the main place of living. This rule makes the tax bill grow from about £2,171 to near £4,342 a year starting April 2024 (Source).
The rule aims to free more homes for local residents by focusing on busy spots. More than 150 councils plan to add this premium. Coastal and rural areas see many second homes and holiday houses. Places like Cornwall, South Hams, and Cumberland feel this change more (Source).
Wider Impact for Property Investors
Property investors face many rising costs. They now see a higher tax bill added to increased stamp duty and low mortgage relief for buy-to-let homes (Source). Investors will watch costs rise further, especially in tight markets where gains are small.
Council tax rates in many regions may jump by up to 10% on homes. This change adds more strain on property owners.
Checking Your Home’s Tax Status
Owners should check if their house is seen as a second home. A second home means a furnished property that is not used as a main home. Some confusion has grown over this idea. For example, a wooden hut in Pembrokeshire was seen as a second home because it had furnishings. The result was a high tax bill, even though it was not used for living (Source).
To see if the extra tax applies, visit your local council website. In many popular holiday spots, councils have already voted for the premium rates. A government portal lets you find the right council for your postcode.
Different Types of Property
Not all properties get the same rules:
• Buy-to-Let Homes – These homes tend to be free of council tax because tenants pay it.
• Houses in Multiple Occupation (HMOs) – Landlords pay the tax since they rent each room. They usually add these costs to the rent.
• Empty Homes – Homes that are unfurnished and empty for over 12 months may see extra tax premiums, which rise with the time they stay empty.
Finding Exemptions
In some cases, owners can stop or cut the tax on a second home. Houses that undergo major fixes may pay less while work goes on. Also, there are exemptions for inherited homes during the year after probate and for some work-related reasons.
Final Thoughts
New council tax rules now spread across the UK, especially in well-loved holiday spots. Second-home owners and property investors must sit with these new facts and act soon. It is wise to keep up with local council choices and to measure how these changes affect plans, especially in HMOs.
The rules intend to free up homes for local people. Still, the rising costs may push property investors to change their plans and think over how they manage their investments.
For more details on council tax changes, check these sources:
Staying well informed and ready to adjust will be key as the property scene changes.
