Crises more often than not spotlight an issue previously unseen.
Two years ago, when the pandemic hit, I was made aware by Cllr Judy Pearce, of South Hams District Council, that the Government’s generous business rate grants were being claimed by those who were exploiting a tax loophole to escape paying Council Tax.
Not only did this situation cost the council an estimated £1.3m a year in lost tax receipts, but it also allowed millions of pounds to be paid out during a global emergency to those who simply owned second homes and who had taken advantage of this historic oversight.
My heart would sink at the prospect of another lockdown with a further generous support package being reduced by those who did not need it.
While precise figures are still being calculated, it is estimated that several million pounds were paid out to second homeowners who were registered for small business rates across the area.
As Cllr Pearce and I are not ones to sit idle, we immediately put together a policy paper outlining the problem along with the potential solution to this issue.
We proposed in early 2020 that there needed to be a change to the tax rules to protect genuine holiday lets while also ensuring that second homeowners were paying their fair share to support local facilities and resources.
Under our proposals, we suggested that the Government introduce a minimum number of days for which holiday lets must actually be let, along with a minimum number of days that they are available.
If the threshold on either level is not met, then the qualification for business rates, business rate relief and, during Covid, business rate grants are all withdrawn.
As ever, the process has been long and frustrating.
From meetings with the Chancellor and the Chief Secretary of the Treasury to the Housing Minister, the Secretary of State of Communities and Local Government, anyone even loosely connected to this issue was tracked down and made aware of the oversight and the need to rectify this situation.
Debates in Parliament were held and South West MPs spoke with great unity about the impact of second homes and Airbnb lets on local housing supply, affordability and development greed.
All of which has been encouraged by generous tax benefits and grants.
Thankfully, when you can save taxpayer money and help to address a small part of the housing crisis, doors are opened.
Just last week the Government announced that it would be bringing forward our proposals and tightening up the rules.
Under the new proposals, holiday lets must be rented out for a minimum of 70 days a year to qualify for business rates and must also be available for 140 days a year.
This small change will not only help to bolster the coffers of our local council, but also ensure that those who do buy second homes in South Devon are paying their share into the local community.
Just a few weeks ago, I highlighted the staggering number of second homes across South Devon.
On the current trajectory, our towns and villages will become dormant in winter and overpopulated in summer.
We must find the balance and ensure that residents who wish to live in South Devon are provided with ‘primary residency only’ properties that are affordable and that will help to keep our vibrant communities alive and well.
As a huge supporter of the tourism and hospitality sector, I recognise the need and value of ensuring people come to South Devon.
But to date, it has been too favourable to visitors, not residents.
This change in the tax code marks the first of many steps that we can take to redress the balance and to create stronger local communities.
Cllr Judy Pearce and I have had a small success in this area.
Time will tell what other positive impacts it might have on the housing markets.
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