New tax grab to destroy second home dream

An Aussie council could be the first to follow in the footsteps of a controversial UK tax policy which could destroy housing ambitions.

Mag Humphreys does not consider herself a typical second homeowner.

The 71-year-old inherited a four-bedroom bungalow in Rock, Cornwall, England, along with her four siblings after their parents died two years ago.

The property was built by her family in the 1960s and is only occupied for nine months of the year.

And yet, from April 1, Ms Humphreys will be charged £6,000 (AU$12,342) a year by Cornwall Council as she is swept up in a country-wide clampdown on second homeowners.

According to The Telegraph, for the first time ever, more than 150 local authorities in England are introducing a 100 per cent premium on council tax for second homes after being given the green light from the Government to do so. It can be charged on properties which are furnished, but not used as someone’s main home.

MORE NEWS

Council ignores residents, approves mega shed

Home loan hell: Shocking 10-year savings stat kills first-time buyers’ hopes

True cost of investment properties revealed

Mag Humphreys, 71, will be charged £6,000 (AU$12,342) a year by Cornwall Council from April 1. Credit: Jay Williams via The Telegraph.

While the tax grab will hurt as many as 130,000 UK property owners, who will see bills for second homes double from £2171 (AU$4466) to £4342 (AU$8932), the concept of councils and governments looking to boost their coffers is not a new one.

In Australia, Merri-bek council in Melbourne made headlines last year for considering doubling council rates for property investors with multiple properties, aiming to make owning investment properties less attractive.

Councillors voted in favour of a motion, put forward by Cr James Conlan, to seek advice on whether the move was possible last June, with a resolution yet to be revealed.It means Merri-bek could become the first council to follow in the footsteps of the UK.

“Anyone owning two or more properties may in the vast majority of cases have a greater capacity to pay (higher rates),” Cr Conland said.

“Unlike owner-occupiers and renters, investors can sell at least one residential property without making themselves homeless.

“Ratepayers unable to keep up with expenses associated with maintaining an investment property may sell their investment properties.”

MORE NEWS: Shock figure Gen Z wants to earn to live comfortably

Cr James Conlan put the motion forward to charge second homeowners with higher rates. Picture: Merri-bek Council

Victorian second homeowners and investors are already slugged with a flat rate tax of up to $975, plus an additional levy on the value of their land, following a new state government scheme implemented just over a year ago.

The government announced the “temporary” measure would last for the next 10 years as part of the government’s plan to pay down its Covid debt.

Victorian Airbnb owners and users now also face an additional double tax whammy after the government introduced a bill to parliament to impose a 7.5 per cent user-pays levy on short-stay platforms such as Airbnb and Stayz.

The legislation will apply to stays of less than 28 days, but will not apply for bookings made before January 1, 2025.

Meanwhile, in Queensland, Brisbane City Council investigated slugging homeowners who rent their properties on short-stay sites like Airbnb with ‘significantly’ higher rates in 2022.

The proposal aimed to ease the city’s rental crisis, but failed to get final approval and support.

This is despite a survey conducted by The Courier Mail, showing 68 per cent of readers supporting higher rates for second homes used for tourism purposes.

People queue up to inspect a rental property in Melbourne. Picture: NCA NewsWire / Diego Fedele

In Sydney, cost-of-living pressures have been blamed for motorists avoiding toll roads, as new data shows just how much people are paying before they receive government relief.

According to The Daily Telegraph, a survey of 1400 motorists last year by consultancy SEC Newgate, found drivers thought twice about which toll roads they may use or if they should avoid them altogether, in order to save money.

Back in the UK, thousands of homeowners are reading themselves for exorbitant, four-figure council bills set to land on their doorsteps.

According to The Telegraph, town halls were given the power to impose premiums on second homes in the Levelling Up and Regeneration Act 2023.

Cornwall Council chose to apply a 100 per cent premium as of April 1, while authorities in Derby, Watford, North Yorkshire and South Hams are also set to introduce their own premiums, as well as councils across the capital.

MORE NEWS

Worrying trend: The concerning thing buyers are skipping in order to buy a home

Rents up $2600 a year in some cities, down almost $10,000 in others

What AI thinks we should do to fix the housing crisis

But, it comes as basic council tax rates also rise, prompting homeowners to deploy clever tactics to protect their assets.

This includes transferring properties into their children’s name, turning the property into a holiday let or putting it on the market, with no plan to sell.

Jo Ashby, of John Bray Estate Agents in Cornwall, told The Telegraph that successive government policies, such as stamp duty changes and council tax premiums, meant “there are more second homes on the market than we’ve seen in a long time”.

The Local Government Association, which represents councils, also told the media outlet: “Charging a council tax premium, for long-term empty and second homes, is one way of encouraging owners to bring these properties back into permanent use.”

A spokesman for the Ministry for Housing, Communities and Local Government said: “We are determined to fix the housing crisis we have inherited, and we know that having too many second homes in an area can drive up housing costs for local people and damage public services.”

Originally published as New tax grab to destroy second home dream