SHDC votes unanimously to adopt 100% Council Tax premium on second homes

South Hams’ Full Council has unanimously agreed proposals for second homeowners to pay "a fair share of Council Tax". 

The proposals agreed by SHDC would see second homeowners paying double the Council Tax amount for an area.

Proposals for the council to adopt a 100% Council Tax Second Homes Premium as soon as legislation allows were passed yesterday, Thursday 15 December, at Full Council.

South Hams District Council declared a housing crisis in September 2021 and backed their declaration by a 12-point action plan (you can find this below). One of those actions included lobbying Government to allow local councils to be able to charge 200% Council Tax on second or holiday homes to ensure they contribute fairly towards the services they receive.

Their lobbying proved successful when in May 2022, the Government published the Levelling-Up and Regeneration Bill, which included proposals, aimed at addressing the negative impact of second homes on the supply of homes available to meet local housing need.

The Bill proposes that councils will be allowed to introduce a Council Tax premium of up to 100% in respect of second homes, meaning second homes would pay double the amount of Council Tax for an area.

The Bill is likely to become law from 1 April 2024 at the earliest.

Cllr Judy Pearce, Leader of South Hams District Council, said: “I’m really pleased to bring this motion to Council with Cllr Brazil. It’s yet another tick in the box of our Housing Crisis’s list of things that we are trying to resolve.

“The long-term viability of communities within the South Hams has been detrimentally affected by the level of second homes ownership. The sheer quantity of second homes means that house prices are pushed upwards. This can deny a home to a local resident as prices are pushed outside of what they can reasonably afford. This is especially acute for the younger generation.

“I went to Westminster in November to speak to a House of Lords Select Committee to discuss the challenges around short-term lets and the impact that has in the South Hams. It’s truly concerning that with just under 4,000 second homes in the District, this means that nearly 1 in every 12 homes is a second home.

“We’re not declaring war on second homes; we’re simply levelling the field to make it easier for our local residents to find somewhere to live, let alone somewhere to buy. We know that the majority of people can’t afford the prices of houses around the area at the moment. We do stand in solidarity with our local residents because they all have a right to have somewhere decent to live.”

Cllr Brazil, Leader of the Opposition, said: “I am absolutely delighted that this motion has come about as a joint motion with the Leader of the Council, we speak as one in this Council. This is absolutely the right way forward. It will make a massive difference to us. To people who say it is an attack on second homeowners, it is not. What it is, is asking them to pay a fair share to our communities. They’re in the lucky position to own not one, but two houses, when many of our local families here struggle to own just one.

“The fact that they pay a little bit more should be compared to the increase in value of their second homes. Before the latest hiccup in the economy, house prices in the South Hams increased by around 25% in the last year. Increases of hundreds of thousands of pounds. We are asking them to pay a little bit extra to support the services that we struggle to deliver.

“I’d like to pay tribute to the Leader of the Council. She has worked incredibly hard lobbying MPs for them to understand the issues. I tabled a similar motion about 15 years ago without support but, we have got there in the end.”

Council Tax is charged to households to help fund the services that the area’s local town, district and county council, Devon and Cornwall Police, Devon and Somerset Fire and Rescue Service and the Crime Commissioner provide.

The proposals to charge a 100% Council Tax premium on second homes were agreed with a unanimous vote.

A final agreement to these proposals will be made in February 2023.

You can watch the Full Council Committee Meeting here: https://youtu.be/b1YaD1S0B0c

SHDC’s Housing Crisis 12-point plan:

• The district council will lobby government, through MPs and the Local Government Association, to allow a Council Tax charge on housing plots with planning permission if they have not been built after a specified period. This would encourage developers to get on and build their sites without delay.
• They will also lobby Government to review all holiday accommodation. This would ensure that it is properly regulated, complying with local planning policies and taxes. This could include an extension of the 90-day short let legislation, a proper planning class for short lets and proper licencing for them. This would prevent people finding loopholes in the taxation system and prevent too many local homes being converted to holiday accommodation.
• The council should also immediately review all holiday lettings in the district to ensure that the owners are paying the correct amount for the removal of waste and recycling. Businesses should not be on the normal domestic recycling and waste collection.
• South Hams District Council will also ask the Joint Local Plan project team to review the amounts of affordable housing in the Joint Local Plan and see if this can be increased, so that the percentage of "First Homes" on a development is in addition to the existing requirement for 30% affordable housing.
• The district council already runs a letting agency to encourage landlords to make properties available for local families in need. There should be further promotion of this and regular landlord forums to encourage more properties to become available.
• The district council works closely with registered providers on many housing projects across the district; they will now be working with them to ensure the best use of those properties, such as to encourage tenants to downsize where possible and make larger properties available for larger households.
• In addition to this, the district council is proposing to use some of the affordable housing revenue to increase payments made to those tenants downsizing to make the move more attractable and affordable.
• The council is committed to using Section 106 affordable housing contributions as soon as possible, to help fund developments anywhere in the district where the terms of the Section 106 agreements will allow.
• The council also wants to campaign for changes to the Broad Market Area, to better reflect the costs of rents in the South Hams.
• The council would encourage the development of an exemplar site of low carbon modular housing such as ZEDpods, to show that developments like this can be both stylish and great to live in.
• South Hams District Council also agreed to actively seek opportunities to invest in council owned social housing with highly sustainable specification.
• To lobby Government to allow local councils to be able to charge 200% Council Tax on second / holiday homes, as they do in Wales.