A business rates tax break which benefits holiday home owners is to be reviewed by ministers, who have now launched a formal consultation - and if it deters future holiday home buyers, that could be bad news for agents.
Currently, second home owners pay council tax including when the property is available to rent during the year.But properties are valued for business rates when owners declare their home is available to let as holiday accommodation for 140 days or more in a year.
Any property registered for business rates, rather than council tax, will probably qualify for small business rate relief.
This provides 100 per cent relief from business rates, so no tax is due on properties with a rateable value of £12,000 or less.
Around 47,000 holiday lets in England are liable for business rates, of which 96 per cent have rateable values of £12,000 or less.
Currently there is no requirement for evidence to be produced that a property has actually been commercially let and the government says it’s concerned that owners of second homes which do not fall into this category could - in its words - “exploit the system” by not paying council tax.
The consultation will seek views on whether current criteria should be strengthened “to ensure second home owners are contributing to the local economy through the proper payment of council tax, or, for those genuinely renting out their property and supporting tourism, business rates.”