The current rules around the treatment of second home ownership from a rates and relief perspective are set to be tightened if new proposals set forward by the Government take effect.
Minimum Letting Requirement
At present a second/holiday home can be registered for business rates if it is intended to be used as a holiday let business. However, there is no minimum requirement for the percentage of time the property must be available/used for this purpose – allowing many to apply for business rates and in some cases claim small business rates relief.
The recent Coronavirus support grants provided by the government appear to have brought to the attention of the treasury the number of residential properties falling under the business rates umbrella. It would appear that officials have identified a large number of second/holiday home owners that have claimed up to £9,000 of grants to replace lost income.
Proving It’s a Business
Under the new proposals from HMRC, there will be a requirement to prove that the second home is being used as a genuine holiday let business before it can apply or qualify for business rates. The verification is likely to come in the form of a minimum number of days usage/rental, proving that it is being run commercially.
With a significant amount of second home ownership around the Chichester District or with residents also having second homes elsewhere in the country, this is likely to become an issue, if plans are adopted.