Overseas owners face paying twice as much tax on UK properties

Tax premium of up to 100 per cent to be added from April 1 on homes which are not occupied in the long term

Sandbanks is an exclusive enclave on England's south coast where properties built on the small sand dune peninsula tip change hands for tens of millions of pounds. (Photo by Matt Cardy/Getty Images)

British expats and second home owners face huge increases under the UK's council tax regime from next week on any properties in the UK that are not rented out permanently.

It's an obviously iniquitous charge given expats and holidaymakers use council services far less

Elliot Keck

From April 1, local authorities are able to use new powers allowing them to double the council tax on certain properties, aimed at cracking down on second homeowners or properties used as short-term holiday rentals. Frequent complaints have been made that locals in tourist areas such as Cornwall and Dorset are priced out of the housing market because of a proliferation of second homes.

But the law change, under the Levelling Up and Regeneration Act 2023 brought in by the previous government, actually applies to any property that is furnished and only lived in periodically. It allowed authorities to increase council tax by up to 100 per cent.

The picturesque Cornish coastal fishing village of Mevagissey. (Photo by Matt Cardy/Getty Images)

This means it would affect those living abroad who kept their UK property but did not permanently rent it – perhaps choosing to use it when they returned for holidays – or those that let it through services such as Airbnb.

In total, the move could affect about 500,000 property owners. Exemptions may exist if the properties are put up for sale or are undergoing major refurbishment.

Research for The Times and Sky News found around three quarters of local authorities were taking up the option to double the charge, which would take average council tax bills from £2,280 to £4,560. The tax premium already exists in Wales.

Elliot Keck, head of campaigns for the Taxpayers' Alliance, told The National: “The council tax premium on second homes is a naked cash grab by town halls desperate to squeeze affluent residents out of every last drop, no matter how morally dubious their actions may be.

“It's an obviously iniquitous charge given expats and holidaymakers use council services far less than those with their primary residence in the area.

“Labour should immediately cancel this terrible tax raid and ensure that the premium does not exist beyond the upcoming financial year.”

Estate agents such as Savills have already reported a rise in people looking to sell weekend properties, putting it down to a combination of surcharges and an increase in stamp duty in the last budget, while the value of properties in some coastal towns have dropped by up to 10 per cent.

However, the increased revenue could mean a significant boost to local authorities, which are faced with surging costs for issues such as social care. Cornwall County Council expects to accrue an extra £30 million a year – three per cent of its annual budget – with Dorset making an extra £15 million.

As well as tourist hotspots, several London boroughs such as Wandsworth and Camden are bringing it in, as well as towns and cities such as Bristol and Rochdale.

Prized properties

An Art Deco-style apartment a short walk away from London's renowned Ritz hotel is up for sale. Ben Dale

Data compiled by estate agents Hamptons, published on March 24, suggested 71 per cent of England’s 371 local authorities had decided to capitalise on the new charge from April 1, generating about £500m in total.

Typical council tax bills are also expected to rise by 5 per cent on average from April 1. The Local Government Association, which represents councils in England and Wales, defended the increased charges, saying authorities need to ensure a supply of homes that meet the needs of local people, and a tax premium would encourage owners to bring the properties back into permanent use.

Momentum in the UK housing market slowed in February amid signs of weakening buyer confidence, according to surveyors.

Buyer demand slipped to its weakest levels since November 2023, with a net balance of 14 per cent of property professionals reporting a fall in demand rather than a rise, according to the Royal Institution of Chartered Surveyors (Rics).

Its survey of professionals indicated that higher stamp duty costs for some home-buyers from April 1 are expected to weaken market activity.

Concerns over interest rates, inflation, and global events also appear to be dampening buyer confidence, the report said.