What are the council tax rules for second homes?

If you own a second home or holiday home or are thinking of buying, what are the council tax implications?

Silver house key in a door
(Image credit: boonchai wedmakawand)

If you’re considering buying a second home in Britain, or if you already own one, it’s worth knowing council tax rules are due for an overhaul. Furnished homes which aren’t a main residence could see their bills double.

And if you own a property in Wales, you’ll already know this. From April 2023, local authorities have been able to charge second-home owners up to 300% for council tax.

So what are the rules for council tax on second homes, and who has to pay?

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Who has to pay council tax on buy-to-let properties?

First things first, owners tend not to be liable for council tax on buy-to-let (BTL) properties. If you have tenants, it’s their responsibility to ensure that council tax is paid.

Houses in multiple occupation (HMO) tend to be the main exception here, where tenants share a property, but live separately. HMOs also usually have shared areas, such as a kitchen, toilet or bathroom.

In these instances, the landlord is liable for the council tax bill – even if the property is empty. They might factor the cost into the tenants’ rental agreement, however.

Do I have to pay council tax on a second home?

Generally speaking, the property owner picks up the council tax bill on a second home. This is likely to be the full amount, in addition to what you pay for your main residence.

It used to be the case that discounts were available on second properties, as it was assumed the owner wouldn’t be making full use of the local services.

This view has fallen out of favour, and these days you’ll be lucky to get a council tax discount on a second home. Few – if any – councils offer discounts, save for a few specific exceptions. The best way to find out is to contact your local council.

Exceptions include second properties such as a mooring with a boat, or a static caravan in a holiday park. While you may have to pay service charges, these are exempt from council tax.

If you have an annex, this may qualify for a 50% council tax reduction if it’s occupied by immediate family. In the case of dependent family members, such as those with a disability, this could go up to 100%. Again, check your council for specific rules.

Do I have to pay council tax on a holiday let?

Another way to avoid paying high levels of council tax is to let out the property. According to HomeOwners Alliance: “Second homeowners will still have the option to avoid paying higher council tax by opting to pay business rates if they make their property available for rent.”

If you own a self-catering property in England, it’s valued for business rates. To qualify, it should be available for short-term lets for at least 140 nights over the current and previous tax years. It also needs to have been successfully let for at least 70 nights over the last 12 months.

What are the second home council tax rules in Wales?

In April 2023, local authorities in Wales were given the discretionary power to charge a council tax premium for second homes of up to 300%. This is intended to free up housing stock for locals, and can also apply to properties which have been empty long-term.

Holiday lets can qualify for business rates, sidestepping the council tax hikes. However, the number of nights the property needs to be occupied has risen from 70 to 182 nights in a year.

What are the proposed new council tax rules for England?

As part of the government’s Levelling Up and Regeneration Bill, it’s expected that council tax on second homes in England could double. The proposals to give local authorities discretionary powers to impose council tax premiums are backed by all parties.

It’s thought that this will come into effect in April 2025. And according to The Telegraph, 78 of the 279 authorities responsible for council tax have voted in favour of increasing powers. It also estimates this will affect 107,594 second homes in England.

Is council tax payable on an empty home?

Empty homes may be eligible for a council tax discount in the short term, such as when construction is underway rendering it uninhabitable. Again, it’s worth checking with your local council for their exact rules.

If properties are empty for over two years, they’re likely to be hit with an additional council tax premium. At the time of writing, property owners in England may have to pay:

  • Up to 100% for properties empty for 2 to 5 years
  • Up to 200% for properties empty for 5 to 10 years
  • Up to 300% for properties empty for over 10 years

Plus the definition of ‘long term empty homes’ may be amended to 12 months when the Levelling Up and Regeneration Bill becomes law.

How can I pay less council tax?

Council tax bands in England and Scotland are based on the property’s value in 1991. Strange but true. This means that perhaps hundreds of thousands of properties nowadays could be in the wrong band, so it’s well worth checking your council tax band to see if you’re paying the right amount.

It’s worth noting that your council tax band could go up, but this happens in a minority of cases. 

Certain people are likely to qualify for a council tax reduction. For instance, single occupants usually qualify for a 25% discount, which remains the case if they live with people who are ‘disregarded’ for council tax purposes – such as those under 18 or in full-time education. And if you or someone you live with has a disability which means more space is required, you may also be able to pay less by dropping a council tax band. 

Where to buy a second home

If you’re in the market for a second home or potential holiday let, it’s worth checking out the cheapest cities to own a home in Britain, and the top 10 up-and-coming property areas in the UK

Owe Carter

Owe is a freelance writer and editor who has been writing professionally for around 20 years, specialising in consumer issues, household and personal finance. He has worked with brands such as Look After My Bills, Admiral, The AA, Principality, Veygo and Folk (formerly BrandContent). He also worked with NHS Wales, Cardiff University and Proper Design on endometriosis.cymru – a project prompting endometriosis awareness, giving voice to those living with the condition. He was also a sub-editor with Go.Compare, and copywriter and content producer for Confused.com.