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Gloucestershire Business News

EXCLUSIVE: Second home owners in Gloucester to be hit by tax increase

Tax will be doubled on second homes in Gloucester under proposals by the council.

It also wants to charge a premium on empty homes after one year instead of two, in a bid to encourage owners to "bring them back into use" more quickly.

The increases would result in a total of £334,000 more council tax being charged.

A report going to Gloucester City Council cabinet on Wednesday (Jan 10) said the changes will help address the "increased pressure" to find housing for people in need.

They will also close a "loophole" which allows owners of empty homes to avoid tax charges by furnishing their properties.

But the council also warned it could encourage second home owners to practise tax "avoidance" by claiming properties are being rented out - allowing them to be transferred to business rates.

Second homes are properties that are furnished but where no-one lives as their main residence. Until now owners have been billed the standard 100% council tax charge based on the property band.

But many people already avoid this by saying their property has been available to rent for more than 140 days per year. The property is transferred to business rates and they receive 100% relief paid for by central government.

This means owners pay neither council tax nor business rates and do not have to prove they actually rent the property for even one day per year.

However, since April 2023 this work around for second home owners has been stopped. They now have to prove that the property was actually rented out for more than 70 days in the previous financial year.

The city council said the change should ensure that only properties "genuinely being utilised for business purposes" benefit from business rates.

The Levelling Up and Regeneration Act 2023 also gave local authorities powers to further clamp down on second home owners by increasing the tax premiums on their properties.

Gloucester City has decided to bump the charge up by the maximum 100%, doubling tax bills for the 153 properies listed as second homes. It will see an additional £249,000 billed, generating £27,000 a year for the council.

The Levelling Up Act also gives local authorities the power to apply a tax premium on empty homes after one year instead of two.

The number of empty homes in Gloucester is fluid but there are currently around 54 which have been unoccupied for two years or more. Owners have to pay an additional 100% premium which amounted to £85,000 in the last tax year.

The council said it cannot assume applying the premium after only one year will result in similar additional amounts being billed.

However, it hopes the changes will provide a "further incentive" for owners of long-term empty properties to bring them back into use.

The report said: " There are negative effects on the community associated through long term empty properties which are likely to fall into disrepair and be subject to anti-social behaviour such as squatting or vandalism.

The council also has a working group across service areas which is reviewing its approach to empty homes and engaging with owners to understand their behaviours and what the council can do to incentivise getting empty properties back into use.

If approved the tax increases would come into effect on April 1, 2025.

Any additional income generated would be shared across the city council's main preceptors, Gloucestershire County Council and the Office of the Police and Crime Commissioner.

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