Distorting the housing market: tax loopholes & business grants

“There is a huge amount of evidence across the county to say that private landlords are flipping their properties – turning out people and families – to turn them into Airbnbs.”

“Second home owners are paying business tax instead of council tax”

“Allowing some second homeowners to register as a business – and claim lockdown grants.”

“The Welsh Government can give councils the power to increase council tax by up to 100% on second homes.”

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Some two months ago, a news post on these pages looked specifically at the issue of AirBnB:

Sidmouth, housing to rent and AirBnB – Vision Group for Sidmouth

Reposted onto local social media, a question was asked, to which most respondents said ‘Yes’:

Sidmouth Community | Should we be trying to limit the number of AirBnB lets in the Sid Valley

(20+) SIDMOUTH community for the people | Should we be trying to limit the number of AirBnB lets in the Sid Valley | Facebook

Since then, there’s been more coverage of the issue.

This is from last month’s debate at Devon County Council:

The short-term rental website has been criticised during a full meeting of the county council. Leader John Hart (Conservative, Bickleigh & Wembury) said it was one of the reasons why the housing market in Devon has “distorted immeasurably” over the last two years, with private landlords switching to holiday rentals. He slammed as “a nonsense” homeowners having “the right to turn their house and flip it into a business rate” – an option for property rented to holidaymakers for a certain amount of days a year, and thus not being eligibel for council tax.

However, Labour councillor Yvonne Atkinson (Alphington & Cowick), while acknowledging there was a housing crisis in the county, defended Airbnb and instead blamed the government. “I can tell you that in Exeter, Airbnb provide a fantastic service to key workers and people who need short-term accommodation for working and studying,” she said. “They provide already-furnished accommodation to allow people to continue to work. They’re not the problem – it’s government policy which is the problem. So, we can’t demonise Airbnb. We have to look at the government policy on this.”

But the party’s leader at county hall, Councillor Rob Hannaford (Exwick & St Thomas), disagreed “profoundly” with his colleague. He told the meeting: “There is a huge amount of evidence across the county to say that private landlords are flipping their properties – turning out people and families – to turn them into Airbnbs. And I’m sorry, if that means I’ve got to demonise them, then I will demonise them. It’s a public meeting and I cannot let that go unchallenged.”

Is AirBnb causing Devon housing shortage? – Radio Exe

Meanwhile, there’s the parallel issue of tax on second homes.

This is from last month’s West Devon council meeting:

Councillors are calling on the Government to close a tax loophole for second home owners as West Devon plunges deeper into a housing crisis. West Devon Borough Council’s hub committee members want Secretary of State for Levelling Up, Michael Gove, to prevent second home owners from paying business tax instead of council tax, which is 50 per cent cheaper.

The move is against a background of a radically reduced market for rented accommodation for local people as landlords convert their properties into Airbnbs. City people escaping the rat race are also snapping up homes beyond the purse of local people. Councillors heard there was mounting evidence that tenants in West Devon were given two months to get out of a property being switched to the Airbnb market — and there was almost nothing they could do about it. Leader Neil Jory said the housing problem was one the biggest challenges the authority had to face and it might take years to resolve.

Call to close second homes loophole as West Devon housing crisis deepens | Tavistock Times Gazette

There have been more calls for changes in policy this week.

From Cornwall:

A former MP and Cornwall Councillor claims that second-home owners are set to benefit from a new £6,000 grant given to businesses affected by Covid. Andrew George, former MP for St Ives between 1997 and 2015 and now Cornwall Councillor for Ludgvan, Madron, Gulval and Heamoor, has also reiterated his call for the Conservative government to take back the grants given to second homeowners and spend it on alleviating housing pressures in Cornwall. He claims that the failure to close the loophole, which allows some second homeowners to register as a business, led to an estimated £104 million going to second homeowners during the first lockdown of 2020, will see another £40 million of Cornwall’s coronavirus aid budget going the same way.

Andrew George ex Cornwall MP claims second homeowners will get another £40m in grants – Cornwall Live

And from Westmoreland:

England could “learn lessons” from the way the action the Welsh Government is taking against second homes in Wales, a Cumbrian MP has said. Tim Farron, a former leader of the Liberal Democrats, represents a coastal rural community in the county in the north-west of England.

Leading a debate in the House of Commons on second homes and holiday lets, he said that the housing crisis which had been in development for decades “has rapidly become a catastrophe during the two years of the pandemic”. “There are things that the Welsh Government could do, and there are some things that they are already doing that the UK Government are not doing—we could learn some lessons from them,” Tim Farron said. “The Government could follow the lead of the Welsh Government and give councils the power to increase council tax by up to 100% on second homes in the worst-affected communities.”

England could ‘learn lessons’ from Welsh Government on second homes ‘catastrophe’ says Cumbrian MP

South Lakes MP Tim Farron outlines seven-point plan for housing crisis – cumbriacrack.com

   
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