A sweeping tax reform targeting second-home ownership is about to transform the property landscape in England, as more than 500,000 homeowners brace for a dramatic rise in council tax bills from 1st April 2025. The change, part of the Levelling-up and Regeneration Act passed by the previous government, gives local councils the authority to impose a 100 per cent premium on second homes — effectively doubling what owners will pay in annual council tax. And with nearly three-quarters of councils opting in, the effect will be far-reaching.
Average council tax bills for second homes will jump from £2,280 to £4,560, while some owners of larger or more valuable properties could see their annual payments rise to as much as £8,000. With the reform due to kick in next week, estate agents are already reporting a flurry of activity, as owners scramble to sell properties before the costs bite. Meanwhile, early signs suggest house prices in some popular coastal areas — many of them reliant on tourism — have already dropped by as much as 10 per cent.
But this isn’t just a story about higher bills. It’s also a tale of two Englands: one of idyllic holiday homes and lucrative lettings, the other of local families squeezed out of the housing market in their own communities.
A Windfall for Councils, But Is It Enough?
The anticipated financial impact of the new tax regime is significant. Research suggests that total council tax revenue from second homes in England will jump from £549 million to £1.02 billion annually. That’s a windfall of over half a billion pounds for local authorities, many of which are struggling under the weight of rising social care costs, inflation, and post-pandemic economic strain.
Cornwall, often dubbed “the second-home capital of England”, stands to gain £30 million a year — the equivalent of a 3 per cent boost to its total revenue budget. Dorset expects to bring in £15 million, and North Yorkshire, another region popular with second-home buyers, projects an additional £14 million. These are substantial figures, particularly for councils in rural areas where every penny is fiercely contested
Levelling the Field, or Punishing the Few?
At the heart of this policy lies a bold political and social ambition: to make housing more accessible for local people in areas where second-home ownership has pushed up property prices. Over the past few years, particularly in the wake of the pandemic, demand for second homes surged as remote working and lifestyle changes led people to seek out seaside retreats and countryside boltholes. The result has been a widening affordability gap in areas that were already struggling to keep younger generations rooted in their communities.
Research from last year revealed that house prices in coastal areas rose by 4.2%, compared to just 0.8% in other parts of England. The disparity was fuelled in large part by second-home purchases and short-term holiday lets, which reduced the stock of homes available to local buyers and renters.
For many residents, particularly in towns like St Ives, Padstow, or Whitby, the new tax is a welcome correction. It’s seen as a way to rebalance housing markets and prioritise people who want to live and work in the area year-round. The policy allows councils to take action based on local needs, offering a degree of autonomy rarely afforded in national housing strategy.
Yet not everyone is applauding the move. Critics argue that the reforms paint all second-home owners with the same brush, failing to distinguish between the super-rich and ordinary people who’ve worked hard to invest in a modest second property.
Stamp Duty, Inheritance, and the Rising Cost of Property Ownership
The council tax premium isn’t arriving in isolation. It forms part of a wider strategy by both the current and previous governments to reshape property taxation — and second-home owners have found themselves directly in the crosshairs.
Just months ago, the Chancellor, Rachel Reeves, increased the stamp duty surcharge for second homes from 3 per cent to 5 per cent. It’s a move that adds thousands of pounds in up-front costs to any purchase and is widely seen as another deterrent to buy-to-let investors and holiday-home hopefuls.
Add to that the UK’s status as the highest property-taxed country among advanced economies — with taxes on property totalling 3.7% of GDP — and it’s no wonder that interest in second-home ownership is cooling. Business rates, inheritance tax, and rising utility bills have further added to the sense that the tide is turning against those with more than one roof over their head.
Will This Kill Off the Second-Home Market?
In truth, the second-home market isn’t about to disappear. There will always be people drawn to the sea air, scenic views, and investment opportunities that holiday properties provide. But what’s changing is the financial calculation — and for many, it no longer adds up.
As the debate rumbles on, it’s worth remembering the people at the centre of this issue: the communities themselves. For residents in coastal villages and rural towns, the impact of second homes has been tangible for years. Empty homes in winter, dwindling school numbers, and the slow erosion of year-round local services have all contributed to the growing backlash.
The new council tax policy won’t solve everything. It won’t, by itself, deliver the affordable housing the UK so desperately needs. But it may start to tilt the balance — making it less attractive to leave homes empty, and giving locals a better chance of putting down roots.
For the councils implementing the charge, the benefits are immediate and measurable. For second-home owners, the cost is now undeniable. And for the wider market, the message is clear: second homes are no longer the lightly taxed haven they once were.
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