Second home owners using obscure loophole to dodge rising council tax bills in Britain’s holiday hotspots

16 April 2025, 00:25

Second home owners are using a little-known loophole to dodge council tax bills on their expensive homes in sought-after British holiday towns and cities.

Experts have expressed their fears about the practice, as property owners are listing their properties on the market to qualify for a legal loophole allowing them to avoid new council tax rates.

The new rules for homeowners came into effect on 1 April, allowing local authorities to charge a 100 percent premium on second homes under the 2023 Levelling Up and Regeneration Act.

While the move is designed to address Britain’s housing crisis, property owners have been exploiting the legal workaround, which grants them a 12-month exemption from the charges.

The practice, which property leaders say is ‘raising eyebrows’, is fully legal as long as the property is publicly listed on the market at a price that aligns with the local area.

But ministers have started to ask questions about the number of houses and properties that have been listed for sale in popular British holiday destinations.

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Ben Maguire, the MP for North Cornwall, said the drastic increase in properties for sale in the coastal holiday town of Padstow was 'suspicious'.

'Houses here sell like hot cakes. It's slightly suspicious, seeing that,' he told the Telegraph. 'They've been on the market a long time.'

The Hamptons estate agency said only around a fifth of homes listed on the market this year are under offer.

Harry Goodliffe, who works at the Hampshire-based HTG Mortgages, said second home owners are ‘playing the game’ but clearly have no intentions of actually selling their homes.

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“We’ve noticed a few properties pop up at inflated prices or with zero real marketing effort. It’s a clear sign they’re just buying 12 months of relief, not seriously exiting the market,” He told the Telegraph.

“This loophole might be legal, but it’s raising eyebrows. List the house, dodge the tax, but don’t actually sell.”

The council with the most second homes is Cornwall by a distance, followed by Dorset, North Norfolk and Kensington and Chelsea.

According to analysis by the newspaper, the average second home owner saw an increase of 77% on average in their tax bills for 2025-26, to £3,672.

While the practice is just becoming apparent now, several councils reportedly expressed their fears about the legislation being abused in a Government consultation in 2023, suggesting the tax exemption “could be open to abuse and create opportunities for avoidance”.

Government guidance says that: “Owners may need to provide evidence to their council to benefit from this exception. To qualify, a property must be on the market for sale or let at a reasonable price.

“In cases where the council considers the sale or rental price to be inflated, the council can request evidence to support the asking price.”