Holiday let tax rules put Northumberland communities at risk, 16 parish councils tell Chancellor

Parish councils in north Northumberland have warned that communities are at risk of being ‘hollowed out’ by housing issues.

Friday, 6th August 2021, 2:29 pm
Updated Friday, 6th August 2021, 2:54 pm
The popularity of places such as Beadnell has made them attractive for holiday lets.

Beadnell campaigner Jen Hall has written to Chancellor Rishi Sunak on behalf of 16 parish councils calling for changes to taxation rules relating to Furnished Holiday Lets (FHL).

She writes: “We accept that FHLs can benefit an area, but the current tax benefits distort everything including the availability of accommodation for much-needed employees.

“There has been widespread speculation that you will close the loophole that currently allows FHL that are ‘available’ for letting for 140 or more days a year to be valued for non-domestic rates.

“This move will be widely welcomed in areas such as ours in north Northumberland, where the proportion of homes classified as FHL and second homes is running at record levels – and continuing to increase.

“The loss of income to the local authority, community and especially parish councils is highly damaging.”

She explains that the number of FHL holiday homes in Bamburgh, Beadnell and Seahouses registered for business rates has risen by 50% since 2015.

FHL businesses now account for 22% of all homes across the three parishes, peaking at 31% in Beadnell.

“The loss of Council Tax income is compounded by the fact that two-thirds of the near-600 properties registered for business rates have then successfully applied for small business rate relief, meaning these homes contribute little or, in most cases, nothing to council income,” she explains.

“This is a scandalous abuse of the present generous tax regime for second home and FHL owners, which will encourage further growth in the FHL market without more stringent regulation.

“Furthermore, the advantageous tax position for FHL and second homes is leading to house price inflation that puts home ownership beyond most people employed in the local economy.

"It has also precipitated a collapse in the private rented sector as landlords seek FHL status for their properties with the higher income and tax breaks that come with it.

"We know of three local families in recent weeks who have been served notice to quit their private rented accommodation, with the expectation the premises will resurface soon as FHL.

"A consequence of this lack of both rented accommodation, and affordable accommodation to buy, is that young families are unable to settle in the area and fill the many jobs currently vacant in the local service industries.”

The Chancellor is being asked to consider further tax changes ‘in order to protect communities like ours and stop them being hollowed out and left with neither a young population nor a sustainable year-round economy’.

The parish councils are calling on the Chancellor to end eligibility for non-domestic rates tax relief for holiday home businesses and follow the example in Wales of allowing local authorities to set Council Tax levels for second homes and FHL in certain wards at up to 100% above the prevailing rate.

They also believe the FHL market should be subject to registration and regulation similar to the rest of the tourist accommodation industry.

Jen concludes: “We recognise the changes we are asking for are extensive but believe they are needed both for a fair and equitable taxation regime for local authorities and homeowners, as well as ensuring the viability of communities.”

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