Second Home Ownership: Cumbria

Part of the debate – in Westminster Hall at 11:16 am on 19th December 2018.

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Photo of Rishi Sunak Rishi Sunak Parliamentary Under-Secretary (Housing, Communities and Local Government) 11:16 am, 19th December 2018

I very much take the hon. Gentleman’s point, but I point out that I am going through a range of measures and that in different parts of the country second homes and empty homes can actually be conflated. London, for example, is a slightly different case, as he will know, and I appreciate that in Cumbria and my constituency it is not necessarily the case. However, what I referred to is part of the toolkit that local authorities can use to tackle this particular issue, and it demonstrates the Government’s progress in the general area of ensuring that homes are available for those who need them in the areas that they want to live in.

The third step along the path was to tackle the issue of holiday homes and business rates. Second homes are not the same as holiday lets, but in some circumstances a second property is purchased as holiday-let accommodation and, in the case of holiday-let accommodation, properties are assessed for business rates, rather than council tax, if they are available for short-term lets for 140 days or more per financial year. Any property registered for business rates may qualify and, indeed, is likely to qualify today for small business rate relief.

Concerns have been expressed by many local authorities and hon. Members, including the hon. Member for Westmorland and Lonsdale and Norman Lamb, that some second home owners may be exploiting what has been termed a loophole to reduce their local tax liability by declaring that a property is available for let, but making little realistic effort to let it out, potentially giving them access to small business rate relief and thereby meaning that they pay no rates or council tax whatever. It is only right that genuine holiday-let businesses can apply for the relief to which they are entitled, and we should not overlook the genuine benefits that short-term lettings can bring. However, I and the Government take extremely seriously any suggestion of council tax avoidance. That is why, following a commitment in the last Budget, we have launched a consultation on the local tax treatment of holiday lets; it runs until 16 January.

The hon. Gentleman mentioned the example in Wales, and he was right to do so. It informed my thinking as we designed the consultation; indeed, the questions posed in the consultation are very much suggestive of an approach that has been adopted in Wales. I am pleased that the hon. Gentleman has already been encouraging his constituents to respond to the consultation, and I know that he supports the measures referred to in the consultation to strengthen the criteria under which holiday lets are liable for business rates.

The fourth measure to tackle the problem that we are discussing involves stamp duty. Moving beyond council tax, the Government have raised stamp duty rates for those buying additional homes. Since April 2016, anyone purchasing a second home has paid a stamp duty charge three percentage points above current rates. There were more than 300,000 first-time buyers in the past financial year alone; that is an increase of more than 5% on the year before.