Herefordshire could double the council tax charged on second and some empty homes in the county under new proposals.
The plan being put forward to Herefordshire Council’s cabinet next week could make a dent in the county’s forecast budget shortfalls, as well as freeing up properties for local use.
Second home ownership in Herefordshire “is significant, and has a negative impact on the supply of homes available to meet local housing need”, the cabinet proposal says.
The approximately 6,900 second homes within the county could generate over £12 million extra council tax revenue under the plan, or more than 10 per cent of the total current council tax revenue this year of £119.5 million.
To deter “avoidance”, the plan proposes tightening the criteria under which owners can reclassify a property as a business, such as for short-term letting.
A further possible way of avoiding the premium would be for couples to claim to each lives separately in two properties – though “financial penalties” are available to counter this, the council says.
It adds that Wales, which introduced a similar measure in 2017, serves as a positive example, as it has reduced numbers of second homes in areas where they previously proliferated.
However the council proposal points out: “It is uncertain whether these downward trends have been triggered by avoidance loopholes, or are evidence that the premiums have brought second homes back into use as mainstream housing provision.”
The proposal also foresees the higher rate applying to properties that have been empty and unfurnished for between one and two years.
Councils can already charge a 100 per cent premium on properties that have been vacant for over two years, and even more on those vacant for longer – an option which Herefordshire already makes use of.
The Government’s Levelling Up and Regeneration Bill, expected to pass into law at the end of next March, will allow local authorities to charge a premium of up to 100 per cent on second homes and those vacant for over a year from the following April.
To make matters harder for councils, they have been told they need to confirm their intentions to use the new powers at least 12 months ahead of to the financial year in which they propose to apply the changes.