Concern over plan to hike council tax

Mortgage brokers have warned that one council&#39s plans for dramatic council tax increases on second homes could be followed by thousands around the UK, with potetially grave consequences for the buyer market.

South Hams Council in Devon will this week discuss plans for a 40% hike in council tax on second homes. If the council decides to raise the duty, the £500 rate currently paid on the average band D property could increase to just under £1,139 – the amount currently paid on primary homes.

This would equate to 90% of the council tax paid on primary homes, compared to the 50% currently paid out by second home owners.

The move follows the introduction of new legislation which allowing councils to levy the tax to a maximum of 90%.

South Hams District councillor Richard Yonge says: “This legislation finally gives the council a chance to get rid of a really unfair loophole and ensure everyone with a home in the South Hams pays a similar amount in council tax.”

But Alan Clements, partner at Plymouth-based Burridge Clements Mortgage Consultants, warns the move could be detrimental.

He says: “There are some locations in South Hams where the ratio of holiday homes to permanent residents is quite high. An increase like that could certainly dampen the market.”

David Hollingworth, mortgage specialist at London & Country, adds: “If one authority goes, you may well see a number go down the same route. It will clearly impact upon the cost of owning second homes.”