Labour Plans Holiday Home Tax

Published / Last Updated on 24/09/2018

Holiday Homes TaxAt the Labour party conference yesterday, a plan was announced to introduce an additional tax on holiday homes.  This additional tax would not affect those that own additional residential properties as normal buy to let properties.

As part of Labour’s plan, Hon Healey, the Shadow housing secretary said: “we will introduce a levy on second homes used as holiday homes to help homeless families”.  It has been estimated that the average annual tax could be around £3,000 per year, raising around £500m.  These additional funds would be used to fund homeless projects.


This is a tough one.  Could this drive property prices down?  Will this push holiday costs up?

The plus side is discouraging people from buying up additional property and releasing more available property on to the market.  That said, holiday homes tend to be more desirable property as people do not wish to holiday in a ‘wreck’, so could homeless families reasonably afford to buy or rent a desirable property?

That said, the less well-off or those that cannot/do not travel or like to take pets away with them tend to holiday in the UK rather than overseas, meaning additional costs to holiday may be passed to them.  This in turn could damage many tourist destinations that survive on seasonal trade.

As ever, those that have worked hard and tried to build up wealth are penalised for success and those that cannot get on the ladder because of inflated prices, particularly in holiday towns, are usually stuck in a rent trap.

Should holiday home owner/holiday let landlords really be upset?  We suggest not really (and the writer is a holiday home owner) given that holiday lets do not pay Council Tax but are subject to business rates and many are business rate free under the Small Business Rate Exemption.  Perhaps they should simply remove the small business rate exemption for holiday lets rather than create yet another layer of tax?