Having a roof over our heads provides us with stability and security and is essential for accessing employment and education opportunities. Local residents, businesses and our local schools have raised their concerns with me about the affordability of local housing and the ability of local people to buy or rent homes where they work. This is partly linked to increase in second home ownership, especially for use as holiday lets, including Airbnbs.
I have campaigned to ministers in the Department of Levelling-up, Housing and Communities about the hollowing out of our communities due to the increase in second home ownership, especially when they are used for holiday lets, and have engaged in finding solutions that affect so many locally. A second or holiday home will either be subject to business rates or council tax and while I am not sure that the idea of doubling council tax for second homeowners is the right solution, I do think that holiday lets should not be able to avoid paying council tax.
Whether or not a holiday let pays council tax will depend on whether the property qualifies for business rates. Changes in the rules came into force from 1st April this year. In brief, if a property is available to rent for 140 days or more in a year and is actually let for 70 days in the past 12 months, it will be rated as a self-catering property and valued for business rates. If a property is available to rent for less than 140 days, the owner must pay council tax. The changes were made to protect genuine holiday lets which benefit tourism, whilst preventing second homeowners avoiding paying into local services in popular tourist areas by claiming business rates. Whilst I welcome these changes, I believe we should go further and ensure that every property pays towards financing local services. Business rates are generally lower than council tax and many holiday lets and Airbnb businesses pay nothing because small business rate relief is usually allowable where the property qualifies as a furnished holiday let. If the relief applies and the rateable value is less than £15,000 the business is zero-rated, meaning that these properties do not contribute to financing local services as they neither pay business rates nor council tax. This is a situation that cannot be right for our local authorities or our local communities.
I was delighted that the Minister took my concerns and those of local residents and businesses seriously by implementing a ‘call for evidence’, relating to tourist accommodation and the potential of setting up a holiday lets register for England. The aim is to gain insight into the impact of short-term holiday lets and gather information that will improve the Government’s understanding of the benefits and challenges associated with holiday home letting. The opportunities and impact of short-term tourism on communities will also be investigated. Tourism is vitally important to Rye and surrounding villages, but we need to get the balance right between the availability of accommodation for tourism and for local people
I am looking forward to seeing the evidence gathered which will help the Government determine whether there are other options that should be considered. I am advocating for a licensing system whereby a property purchased for holiday lets must apply to the local authority for a licence. This would mean that local authorities can assess the capacity for holiday lets in a given locality to ensure that local businesses reliant on tourism flourish, whilst protecting our local communities from being hollowed out by the ever-increasing costs of properties.