Should second-home-owners benefit from business grants?

A councillor and former MP for St Ives reckons that second-home-owners are likely to benefit from a new £6000 business grant aimed at businesses which have been affected by Covid. He is probably right.

This is due to a loophole which Andrew George’s website reveals means that over £100m of Covid aid for Cornwall so far has been claimed by second-home owners.

Mr George believes the loophole, which allows second homes to be classed as businesses, should be closed and monies paid out to second-home-owners should be returned.

How the loophole works.

Under current legislation, people can avoid paying council tax on their properties by registering them as businesses. Then, by stating they do not earn enough to require paying business rates, they are entitled to business rate relief (and also Covid relief during the first lockdown).

There are many legitimate holiday letting businesses in Cornwall and other areas, but Cornwall is said to have 23,000 registered as such. About 10,500 of these have opted to pay Business Rates rather than Council Tax. Many have switched from Council Tax to Business Rates since it became possible in 2012 to claim Small Business Rate Relief (SBRR) and potentially pay nothing.

This is where the loophole gets tricky. In order to qualify to switch a second home from Council Tax to Business Rate liability and then take advantage of the entitlement to full rate relief, the owner must make their home available for holiday letting for at least 140 days (20 weeks) a year. They don’t have to actually let the property for that time. Just make it available for letting. They can still use the home as a second home for the rest of the time.

So, this is a different scenario to legitimate holiday letting businesses which are open all year round (or for most of it) and employ people to do the maintenance, etc.

It is said that there are plans by government to remove the loophole but so far nothing seems to have happened.

If you ever wonder why people are often so anti second-homes, perhaps this goes some way towards explaining it. The pushing up of prices and the shortage of affordable housing is probably another reason.

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