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Council Tax Bill second home

Labour plans to double council tax on second homes

Council Tax Bill second home Plans to double council tax on holiday homes

October brings with it the political party conference season. A time when each party comes together in order to flesh out their major policies. Holiday homeowners reading some of the headlines which emerged from the Party Conferences recently, the reading may seem quite bleak.

The reason?  When shadow housing secretary John Healey took to the stage he announced that he was ready to place a brake on the growing difference between Britain’s housing ‘haves’ and ‘have-nots’ in order to tackle homelessness that “shames us all”.

The focus of much of his ire was the country’s second home owners. Those owning a holiday cottage or second residence potentially being targeted for an additional £560 million tax bill – a doubling of their council tax.

Whilst potentially alarming for cottage owners, a question to be asked here is whether or not you are currently paying council tax on your holiday home or instead pay business rates, and the pros and cons of each of these options.

Should you be paying business rates or council tax?

The answer on this question comes down to two elements; what you use your second home for and how many days you let it out for.

  1. When your second home is used purely for you and your family you should be paying council tax.
  2. If you have a second home and it’s available for short term lets by paying guests for more than 140 days of the year then it should be assessed for business rates and added to the business rates list.

There are currently only 47,307 holiday homes liable for business rates in England. This would suggest that many holiday homes are potentially paying council tax when they should instead be paying business rates. So is there any benefit to doing so if you’re currently paying council tax on a property you let out to guests for a large proportion of the year?

The potential advantages of business rates

Small Business Rate Relief provides 100% relief from business rates on properties with a rateable value of £12,000 or less. This is provided the business uses only one property. It is however worth bearing in mind that relief of this type may still be available under certain circumstances. Therefore it’s worth consulting with your local ratings department if you are unsure.

There is also a concern that some second home owners are registering for business rates to avoid paying council tax. Currently there is little in the way of monitoring to ensure that holiday homes qualify for small business rate relief. For this reason the The Secretary of State for Housing, Communities and Local Government has launched a consultation:

This article is only meant as a top line summary of these issues. Need more guidance on whether you should be paying business rates or council tax? We recommend that you seek a professional working in this area. You can also contact the Valuations Agency Office. 

Boshers are specialist providers of holiday home insurance. For information on how we can help protect your holiday let business ,call us on 01237 429444.

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Selling your holiday home

Tips for selling your holiday home as a going concern

Selling your holiday homeLooking at selling your holiday home after years of welcoming paying guests? Whether you’re selling your treasured property to move on to pastures new or ready to retire from holiday letting, there are a few things to remember when it comes to putting your holiday home on the market as a going concern.

Consider timing when selling your holiday home

Having provided self-catering accommodation to the tourism trade you’ll know how important the peak season is to your holiday letting business, so it’s essential you take this into account when it comes to selling your holiday home to any potential buyer.

Putting your property on the market in the middle of the summer can be problematic; how will people be able to view the property when it’s occupied?  It can also mean that by the time the deal is done they’re into the winter months, and a further six months until the peak season (and revenue) rolls into town again.

Ensure you give yourself and potential buyers plenty of time to exchange contracts and get prepared for the peak letting season. Talk to your holiday letting agency and discuss how you can work together to sell your home as a going concern. Speak to local estate agents in order to find out when the most popular and appropriate times are to sell holiday homes in the area.

Property information

Marketing your holiday home correctly could be the key to maximising the interest you’re able to gain.

Alongside property specifics, we recommend creating an information pack with a break down of the business’ ins and outs, especially if you’re selling as a going concern.

What to include in the pack?

Consider the types of information a buyer would need in order to make an informed decision:

  • How much rental income do you receive per year?
  • When is your main season?
  • How many of your visitors return year on year? Particularly significant on any marketing expenditure that needs to be made in the future.
  • Where do bookings come from? Is there a successful existing relationship with an agent that needs to be continued?
  • Promotions: have you offered any discounts during the quieter months or even peak season?

Taxes and legislation

When it comes to selling your holiday home you’ll need to be fully aware of any taxes and tax-relief schemes that could apply to you. These could include Capital Gains Tax, Entrepreneur’s Relief if terminating your holiday home business, or Roll Over Relief if taking the business elsewhere and your holiday home is classed as a Furnished Holiday Let (FHL).

Research thoroughly with your accountant to ensure you’re fully clued up before you make that important decision to sell!

Also be aware that buyers will be paying an additional 3% in stamp duty from April 2016.

Presentation

As obvious as it may seem, presentation is key when it comes to selling your holiday home. Potential buyers will not only be looking at the property for themselves, but more importantly on behalf of their visitors.

Welcoming viewings after a long summer season when your holiday home is feeling and looking weary mightn’t do your property justice, so if it does require maintenance or a lick of paint, ensure these tasks are completed before putting it on the market.

Specialist holiday home insurance

If selling as a going concern, potential buyers will want to know about the property’s insurance history. Never made any claims? By highlighting this, it provides reassurance about the holiday home and your visitors. If you have had claims for flooding then you’ll be required to declare those to the new owners.

Once the property is about to change hands we’re able to make all of the adjustments to your holiday home insurance to ensure you and your buyers have one less item to worry about. We would be very happy to provide quotations for prospective buyers so please remember to refer them to us. If you’re reading this with intention of buying a holiday cottage then you may find the following article of interest:

Boshers offer specialist holiday home insurance to owners across the UK. For more information on how a specialist insurer can help and support you if you’re buying a holiday cottage to let, please give us a call on 01237 429444.

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Second Home Revival

Second Home Revival. A recent report by Knight Frank examines the growing demand for new-build holiday homes in the UK. The report highlights some interesting statistics such as in the three years up until the beginning of 2010, the growth in nights spent in self-catering apartments grew by 67% to 9.2m and the number of nights in self-catering houses, cottages and lodges grew 20% to 20.8m.

In terms of age groups the, the greatest growth in the tourist industry at present is accounted for by mature people in higher social groups. The trend towards staycations is becoming increasingly concentrated at the upper end of the market and is becoming spread more evenly throughout the year.

Read the rest of the report entitled Second Home Revival here….

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Is your cottage in the country becoming a financial burden?

Is your cottage in the country becoming a financial burden? Here at Boshers it has recently become apparent from a steady stream of holiday home insurance enquiries, that second home owners who use their country and coastal cottages for family and friends use only and often infrequently, are feeling the squeeze of the recent “credit crunch”.

The flipside to this is that thousands of second home owners have for many years been letting their country cottage or seaside home to others for short term family holidays, whilst still reserving a few key weeks for their own use have been managing well and in some cases making a healthy profit. This has proven to be a superb way of subsidising their holiday home investment or keeping inherited property in the family. As self-catering holidays in the UK continue to flourish, despite our sometimes less than perfect weather, supply in popular areas often does not meet demand during holiday periods.

So if you own a second home in an area popular for tourism why not consider letting your second home as a holiday home for short term family holidays. You will of course have to consider, decor, furnishings, legislation, the marketing of your property as well as having the correct holiday home insurance in place including liability cover for guests and employees. More about these areas later …

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