The second homes council tax loophole is playing us for fools: Fury of beauty spot villages overrun by holiday lets as owners dodge soaring bills by exploiting little-known rule

Furious locals living in some of Britain’s most idyllic towns and villages that have been overrun by wealthy second home owners have accused them of ‘playing us for fools’ and using a little-known loophole to dodge council tax bills. 

Crafty property owners are using a legal get-around to skirt a 100 per cent premium on second homes, rolled out by local authorities earlier this month.

By listing their holiday boltholes for sale, owners can receive a 12-month exemption from the higher council levy even if the property doesn’t sell.

But locals have said the ‘suspicious’ number of for-sale signs littering their tranquil villages and the huge surge of rich city-dwellers snapping up vacation properties is threatening to turn their picturesque communities into ‘ghost towns’. 

Neighbours living in the stunning Cornish town of Padstow say the problem is so severe, it could erase the seaside resort’s heritage, permanently driving away local families who have lived there for generations.

‘They play us for fools and act like we are not switched on,’ one fuming resident told MailOnline this week, with another accusing rich homeowners of ‘always finding a way to get out of paying’. 

Average property prices in town – which is home to celebrity chef, Rick Stein – are nearly £700,000, with detached homes regularly selling for £1million or more.

But life-long ‘Padstonians’ say the house price boom has meant that locals have essentially been priced out of the market, with ‘selfish’ city folk claiming properties as their own summer retreats, that can then be rented out.

Paula Milton, 75, who has lived in the town her whole life, said: ‘At least 60 per cent of the houses near me are second homes, you can see how many homes have key safes outside.

‘Second homes have had a huge effect on Padstow in the last few years, this used to be a close community where people knew each other but this isn’t Padstow any more.

‘Prices are so high my daughter will never be able to come back here, she’ll have to wait for me to die.

‘These people will always find a way to get out of paying, surely if they can afford to own a second home they can afford to pay council tax?’

The tactic is fully legal as long as properties are publicly marketed and listed at a price in line with the local area.

Under the new system, owning a second home in the highest council tax band in Cornwall would mean paying the council almost £10,000 per year. 

However, Ben Maguire, North Cornwall MP, said the huge number of properties up for sale in Padstow was ‘suspicious’ – and hinted at homeowners potentially taking advantage of the legal loophole to dodge the council tax hike.

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

Estate agents Hamptons say only about a fifth of second homes put on this market this year are under offer.

Property experts have now accused some second home owners of ‘playing the game’, with sales being slow-moving across the board.

Harry Goodliffe, of HTG Mortgages in Hampshire, says properties have been popping up at ‘inflated prices or with zero real marketing effort’ to take advantage of the 12-month tax relief.

‘This loophole might be legal, but it’s raising eyebrows. List the house, dodge the tax, but don’t actually sell,’ he told the Telegraph.

Another local resident who works as a gardener for many second homes in the town and didn’t want to be identified said: ‘We have noticed a lot of second homes go on the market recently.

‘A lot of second homes that we work on do go onto the market then come off again, the owners haven’t outright said to me it’s about council tax but they think we’re stupid and ignorant.

‘I have to go with it because if there weren’t second homes I wouldn’t have a job. It’s not to say they are all bad but like anything you get some nice people and some not.’

Former soldier Lee Collister, 58, lives in one of the few remaining council houses in the town.

He said: ‘It’s bad what they are doing, it’s really wrong.

‘The housing situation here is so bad I can’t afford my own home. In the winter most of the shops close, most of the pubs close and the town goes to s***.

‘It’s just a holiday destination. There’s nothing here for ordinary people any more and a lot of local people want to leave because they can’t afford to live here.

‘Wealthy people see the houses as a goldmine to line their own pockets, they just use it and abuse it.’

But Simon and Mandy Olive who moved to Padstow and became full-time residents said the council tax increase is a bad idea and should be scrapped.

Simon said: ‘I know quite a few people with second homes who feel like they are being taken advantage of by the council.

‘Unfortunately some of the locals are quite unfriendly to people they feel don’t belong here.

‘People feel they spend quite a lot of money in shops and bars and restaurants and this just seems to be another cash grab against them.

‘This tax just reduces the amount of money people have to spend down here and creates animosity.’

Mandy added: ‘Many of the houses that are up for sale, local people couldn’t afford them anyway.

‘If somebody genuinely has a place as a second home they come down and spend a lot of money and now they are paying close to £1,000 per month in tax.

‘The cost of living has gone up so much they are having to sell.’

The situation is mirrored in the tranquil coastal village of Blakeney. The village, on the other side of England some 400 miles to the north-east, was once dubbed Britain’s ‘second homes’ capital.  

Some of the streets around its centre were empty of people when the Mail visited in the run-up to Easter weekend because more homes than not are holiday boltholes and were vacant.

Blakeney boasts a wealth of pretty cottages which are used by people as their own vacation homes and holiday lets. Big new-builds standing on their own plot have been built on the outskirts of the village and they’re also used as second homes.

But like Padstow, most of the people with family history in the village have been priced out by the second home-owners. Those remaining are resigned to them, saying they’re glad they’re there as they create jobs.

The ‘for sale’ signs around Blakeney are mostly next to second homes, residents say.

Tony Batchelor, 64, lives in an old cottage in the middle of a cul-de-sac of around 10 homes. All bar two are second homes and one of the holiday lets is up for sale, he claimed.

Mr Batchelor, who runs seal-spotting boat trips, said: ‘Me and my neighbour are the only ones who live here full-time. The rest are second homes or holiday homes.

‘There’s an awful lot of second homes. I don’t mind, because they bring money into the village. But they’re pricing all the locals out.

‘All the young families are moving away because they cannot afford the house prices. But now I think the house prices have peaked because there’s an awful lot of houses for sale and they’re not selling.

‘If you walk around the village there’s a lot of For Sale signs and they have been there for a while so I think the property bubble has burst.’

Asked if he minded so many of his neighbours being tourists or holidaymakers, he said: ‘I’m not particularly bothered. Nine out of ten people are very good.’

But he added: ‘We have quite a lot of trouble with car parking, trying to get all the cars in – there can be nine or ten cars.’

One couple who didn’t want to give their names, described how they work cleaning homes in the village. They come from the area and rent in Blakeney.

The man said: ‘There’s definitely a lot more properties up for sale and the properties that are up for sale are not shifting at all.’

The woman added: ‘A lot of these homes are £1million and over.

‘I was born here. When I was growing up you used to buy the houses for a couple of hundred thousand but they’re a lot bigger houses now and cost a lot more money.

‘No-one around here could afford the prices of these homes, could they?’

She said: ‘There’s less of a community here now because there’s less people that live here.

‘A lot of the people that used to live here have moved further inland to afford somewhere to rent.

‘It’s quite sad that there’s a lesser community than there was.

‘When I was growing up you used to know everybody down the High Street. Then the houses got sold and they were mostly snapped up as second homes or holiday lets.’

David Clifton, 74, works as a surveyor and builder for holiday lets and second-home owners in Blakeney, and has defended the village’s temporary residents. 

He said: ‘I can see the effect this double council tax for holiday homes is going to have.

‘There’s holiday properties coming on the market because people do not want the double tax. What that’s going to do is cause a serious problem in the holiday industry which these people [who live in Blakeney] rely on.

‘The whole of the North Norfolk coast relies on these people [second home owners].

‘There’s no work for people. They have to be self-employed.

‘I can see the affect this is going to have on the people that own holiday properties. It’s immoral.

‘They [the second home-owners] are putting them up for sale in protest about it.

‘A lot of people will be moving out of the industry at the end of the day.

‘I only started noticing all the houses up for sale when this Rachel Reeves thing stuck. I think it’s immoral. There’s no mentality about it.

‘The area needs money. It needs people that own the properties who add value.

‘It [holiday home industry] brings in extra revenue and allows people to survive because there’s nothing else here for them. The fishing has gone. There’s nothing else but holidaymakers.

‘We live in a different social order now.’

Some second homes are exempt from council tax because the Valuation Office has classed them as a business.

Tim Bent, 84, and his wife have lived in Blakeney for 18 years. They own three homes in the village, living full-time in one while renting the others out as holiday lets –  which aren’t subject to council tax.

He said: ‘Because a lot of people are selling and coming out of the business it makes it better for people who are still in it.’

The house next door is up for sale after its late owner left it to Blakeney Neighbourhood Housing Society, which was set up to provide affordable homes for local people, he said.

Mr Bent, who has retired from the textiles industry, said: ‘Her grandfather did the same thing. She was a very nice woman and a good citizen.’

He said of the housing crisis that has hit people born in Blakeney: ‘It’s terrible.

‘Blakeney housing association has about 15 homes and that’s been a stalwart for people in Blakeney.

‘They didn’t really want to use her house because it’s too high end. They’d would rather have the money to buy more houses.

‘The ordinary working man cannot afford to stay here so they’re very important.’

But in the Welsh town of Tenby, second home owners there say their dream holiday retreats have been turned into a ‘disaster’.  

Dozens are selling up after being hit by a huge council tax rise meant to help first time buyers get on the housing ladder.

It has caused the property market to collapse and there are fears it will impact on the town’s economy which depends on tourism.

Locals and holidaymakers say Pembrokeshire Council’s 200 per cent rise in second-home council tax has helped no one.

Less than a year later the council has cut the premium to 150 per cent but it’s made no difference.

Dozens of ‘for sale’ signs stand like flags outside pretty pastel coloured flats and holiday homes that have kept the town alive for as long as any one can remember.

More than a quarter of the properties in the town are holiday homes and 154 of them are currently for sale on Rightmove.

The figure may be inflated because second-home owners can dodge the council tax rise for 12 months by putting their properties on the market at a ‘reasonable price’.

But the asking price of houses genuinely up for sale have been slashed by 8.9 per cent in Pembrokeshire according to the Principality Building Society. That figure is believed to be higher for Tenby.

Five years ago the pandemic saw prices rise by 26 per cent as people, many from outside Wales, invested in the ‘staycation’ rental boom.

Now they can’t get shot of them. Locals still can’t afford to buy and other potential second-home owners are put off by the exorbitant council tax and the threat of a new tourism tax around the corner.

Second-home owners can avoid the 150 per cent increase if they can prove occupancy for 182 days a year. But realistically, the holiday season – Easter, Whitsun, school summer holidays and half terms – amount to just 12 weeks a year.

There is a feeling that some second-hand owners will take a chance knowing the council doesn’t have the resources to keep a check on nightly occupancy of the thousands of holiday homes in the county.

But a total of 341 people are currently going through the local magistrates courts for non-payment of council tax, including some second-home owners.

Calum Phillips, senior sales negotiator with estate agents in Tenby said: ‘The second-home tax and the effect it’s had on the town is a conversation I have every day with buyers and sellers.

‘The majority of second-home owners are looking to either sell their properties or list not to get 12-months exemption.

‘Buyers know that there aren’t many second-home owners in the market any more because of the tax and that’s forcing down prices.

‘None of the seafront properties are suitable for first time buyers – they are still not affordable, there’s no parking, no gardens.

‘A lot of the properties have been converted into guest houses and flats, they’re not suitable for families starting out.

‘Eighty-per cent of our stock is out of reach for first time buyers.’

Mr Phillips said there are ‘no positives’ from the tax and the knock on effect is less visitors and ultimately less jobs for young people in the tourist industry.

He said: ‘Anyone looking at buying a second-home is going to say I’ll get done on the stamp duty, done on the council tax and done again on capital gains taxis I sell it.

‘If the tourism tax comes in, it’s not a lot of money but people will see it as yet another tax and that could discourage people from coming here.

‘Tenby has always depended on tourism but we are driving people away. I don’t see how the council is going to make any extra money from the tax if holidaymakers stop coming.’

Pembrokeshire Council says additional income from second-home premiums have been spent on affordable housing (18.75 per cent) enhancing Pembrokeshire (6.25 per cent) and general fund community services (75 per cent).

For retired surgeon Philip Powell, 76, a holiday home in Tenby is a dream come true after spending childhood holidays in the Victorian resort.

But after five years as a proud owner of a two-bedroom seafront apartment he and wife Angel are thinking of selling up.

Mr Powell, from Chipping Norton, Oxfordshire, said: ‘We are one of the people who have been hit, it’s a disaster. We bought our place for £400,000, it’s worth nothing like that now.

‘We had to pay £8,300 in council tax last year, nearly double what we pay at home for a four-bedroomed house in a quarter of an acre of land.’

Proud Welshman Mr Powell said they let the apartment last year for the first time but it didn’t bring in enough to cover the extra tax burden.

The couple have family who have put their second home in Tenby up for sale but have had to slash the price from £620,000 to £500,000 to find a buyer.

But Mr Powell said they plan to hang on to their apartment. ‘It’s very important to me, this was my childhood haunt.

‘We have five grandchildren who love coming here and we want to leave it to them in perpetuity.

‘But we are faced now with a desperate situation where the council rip us apart with tax and the bloody government puts inheritance tax on us.’

His 76-year-old wife added: ‘We feel the second-home tax is unfair. We contribute to Tenby’s economy, we do our Christmas shopping here, I buy all clothes and shoes here.

‘It’s left a very bitter taste. We love coming here and we are going to hang on.’