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Government launches review into tax loophole for second home owners following Norfolk MP’s petition

PUBLISHED: 12:36 08 November 2018 | UPDATED: 13:05 08 November 2018

Wells, in north Norfolk, where a third of all properties bought in the district from 2017 to 2018 were classed as second homes. Photo: Gary Pearson

Wells, in north Norfolk, where a third of all properties bought in the district from 2017 to 2018 were classed as second homes. Photo: Gary Pearson

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The government has launched a review into the tax rates paid by second home owners, following a petition from a north Norfolk MP.

A consultation into the business rates loophole which is costing one of the region’s councils almost £2m in lost revenue this year alone opened on Wednesday, November 7.

Second home owners who register properties as available to let for 140 days or more each year are currently eligible for 100pc relief from business rates and pay no council tax.

Liberal Democrat MP Norman Lamb petitioned the Chancellor on the issue ahead of the autumn Budget, after 1,769 people put their name to it.

He also criticised a “shocking” rise in the number of second homes bought in north Norfolk during the financial year April 2017 to April 2018.

North Norfolk MP Norman Lamb has petitioned the government to close a tax loophole on second homes.  Picture: DENISE BRADLEYNorth Norfolk MP Norman Lamb has petitioned the government to close a tax loophole on second homes. Picture: DENISE BRADLEY

Mr Lamb said: “I’m pleased the government have picked up on this and are going to review.

“I think its long overdue. North Norfolk is particularly badly hit by it - there are so many second homes.”

But he added: “This is not an assault on second home owners. I just think it’s really important everyone pays their fair share. It has an impact on the community.”

Local government minister Rishi Sunak said the department were aware of concerns the system is open to abuse.

Government stamp duty figures revealed a third of all properties bought in the district during this period were classed as second homes: a 25pc increase from the previous 12 months.

The Budget statement, announced on Monday, October 29, included a commitment to a consultation on the “criteria under which self-catering and holiday lets are charged business rates rather than council tax”.

An estimated 47,000 holiday lets in England are eligible not to pay council tax, while 96pc of this number also have a rateable value of £12,000 or under, and therefore pay no business rates either.

There is currently no legal requirement for second home to provide proof the property is genuinely being rented out, in order to benefit from tax relief.

The consultation is seeking views on whether the criteria for this should be strengthened.

It will run until Wednesday, January 16, 2019.

To view the consultation, please visit the Ministry of Housing, Communities and Local Government website.

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