Call for tax overhaul on holiday lets
MP presses Treasury as concern grows at young people being priced out of area
A YORKSHIRE MP has called for an overhaul of the business rates taxation scheme as part of a bid to manage the increasing numbers of properties in the Whitby area that are being turned into second homes, holiday lets or Airbnb properties.
It comes as figures show almost 20 per cent of residential properties in the town are now second homes and of new builds developed in the last 10 years, more than 15 per cent are holiday lets – pushing and pricing young, local people out of the property market and, inevitably, out of the town they have grown up in.
However, many second homes can be eligible for council tax discounts, and holiday cottages are being listed for business rates but also have means to become exempt due to their rateable value – meaning they are not paying into the services they use such as bin collections.
Robert Goodwill, MP for Scarborough and Whitby, raised the issue of changes to business tax legislation with the Treasury, building on measures brought in by the Government in January to close a tax loophole that allowed second home owners to claim their properties are holiday lets.
He said: “A requirement has been brought in where it has to be let for 70 days a year in order to register for business rates, otherwise you have to pay council tax.
“If someone has three separate holiday cottages, and they are registered as separate entities, the owners could still get a rates exemption whereas three cottages in the same complex would go over the threshold.
“Some holiday cottages are registered as businesses. Because that falls into the exemption, they don’t pay business rates. So you have people with holiday cottages that don’t pay any tax whatsoever.
“Personally, my view is that holiday cottages should pay business rates and not be eligible for relief. That is something I have raised with the Treasury because it is quite complex. That is probably the way forward, to re-visit the whole area of whether holiday lets should be eligible for that relief. It is one way to make that business scheme less attractive.”
At a meeting last month, Steve Wilson, Scarborough Borough Council’s planning policy and conservation manager, called for planning matters to go political and for MPs to intervene and push government to change legislation which determines how properties can be used.
Mr Goodwill said it wasn’t currently being considered by government but could be reviewed in future. “It may be everybody is doing the staycation because of Covid. In a couple of years everybody wants to go back to Benidorm. Some of these properties won’t have the level of occupancy and owners decide it is time to look at permanent let or selling.”
He added that even if limitations were placed on holiday lets through planning laws or covenants, local authorities are reluctant to enforce. “Whitby has become a victim of its own success,” he added. “The tourism industry is booming and other resorts would look with envy.”
PROTECTING THE old town of Whitby and surrounding areas has now become “very difficult”, heritage experts have warned.
It comes as traditional yards of fishermen’s cottages are deserted during the week, streets look they have had a power cut because there is no-one living in them during the winter and former council houses are being advertised as holiday lets for nearly £2,000 per week.
Dr John Field, from Whitby Civic Society, says that unless authorities get a grip on the balance between new housing, second homes and holiday lets the very thing that makes Whitby attractive to visitors will be lost.
He lives in one of Whitby’s historical yards. When he moved there 25 years ago all houses were owner occupied – now, out of 20 properties, just three are lived in full-time.
Last month a house was advertised for holiday let in a residential area in Whitby for more than £1,800 per week and during a visit to Runswick Bay, local MP Robert Goodwill thought there had been a power cut as none of the houses had lights on – they were all unoccupied.
Dr Field said: “We are concerned with the wellbeing of Whitby as a whole and that includes the people that live here. There is clearly an issue based on increased costs of housing and the availability, particularly of rented accommodation.”
He says “the ship has sailed” on preventing traditional former fisherman’s cottages, such as those along cobbled Henrietta Street in Whitby’s old town, but backed calls made by Mr Goodwill and Scarborough Council for a tightening up of legislation on who can purchase new builds and affordable housing, and on properties being turned from residential to holiday lets.
“That housing (in the old town) is not going to attract younger families or retired people. They don’t want to carry shopping up flights of stairs and there is no parking.
“That I understand but nonetheless the growing density of holiday lets and second homes is a heritage issue. There is no simple answer.
“We have objected to a number of new developments or holiday lets, not because they are, but because they don’t fit into the area. New build does not have to look exactly like, but does have to fit in with the character of the conservation area – that is a legal requirement, we are not being fuddy duddy or nimby.
“The town won’t move forward if the heritage is destroyed. People come here because it looks and feels different, if it turns into just another town people won’t come.”
Holiday cottage owners paying business rates is “essential”, he says, as local residents are “subsidising” them. “No-one should be against tourism, second homes or holiday lets in principle. They help the local economy but at the same time it is clear Whitby is over-crowded in and it becomes difficult to maintain a quality of life if you live there.”