MP for Scarborough and Whitby calls for tax changes to tackle growing number of holiday lets and second homes on the coast

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 Air BnB 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.

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Has Whitby become a victim of its own success as second home owners and holiday lets threaten to overtake housing needs for local people.

The number of homes used for second homes/holiday lets has increased from 484 in 2002 to 1175 in 2011 and further to 1681 in 2021.

In the village of Lythe, further up the coastline from Whitby and Sandsend, the level of second homes/holiday lets has increased from 30 per cent to nearly 38 per cent over the past 20 years. No new residential development has been completed in the last five years.

Government tables for the numbers of households that are on the waiting list for council homes shows that for the Scarborough borough last year there were 1,973 - an increase from the 1,676 listed in 2020.

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Robert Goodwill, MP for Scarborough and Whitby, is campaigning to The Treasury for changes to business tax legislation, building on new 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.”