North Yorkshire is set to become the one of the country’s first areas to adopt a mandatory 100% council tax premium for second homes as part of efforts to tackle the housing crisis.

The groundbreaking move, which has been approved at a full meeting of Conservative-led North Yorkshire County Council today, will see the premium introduced for council tax bills on second homes from April 2024, should Royal Assent be given to legislation to give local authorities extra powers.

The county has the highest number of second homes in the region, and concerns have been voiced that the trend is undermining the availability of housing for local communities as well as inflating property prices.

The North Yorkshire Rural Commission, which was established to look into a host of issues affecting countryside communities, last year highlighted the affordable housing crisis as among the greatest challenges to resolve.

The meeting today heard an impassioned debate in which numerous concerns were raised over whether the levy would tackle the issue and the housing crisis blamed on Conservative governments selling off council housing and not building sufficient homes to replace them.

As some opposition councillors described the levy as “far from perfect” and “a serious and credible start” to trying to resolve the lack of affordable homes in areas such as Harrogate, the North Yorkshire coast, the North York Moors and the Yorkshire Dales, leading members of the authority nodded in agreement.

The meeting was told it is hoped the premium will provide a £10m boost to finance council priorities, including to help introduce more housing in areas particularly affected by the affordability crisis.

Research has shown the Harrogate district, along with the Craven and Ryedale areas, could each provide about £1.5m in extra revenue through the premium.

'We feel we are being penalised'

While the authority has claimed the measure is “ultimately aimed at bringing second homes back into use for local communities”, the meeting heard from second home owners in Nidderdale who told councillors the move would create financial difficulties for them.

One couple told the meeting they had converted a chapel, increasing the housing stock in the dale for future generations, but were now facing a penalty for having done so.

The residents stated: 

Independent Cllr John McCartney said the tax premium would amount to “tinkering at the edges”, while Independent group leader Cllr Stuart Parsons said “penalising those who aspire” was the wrong way to deal with the problem.

He called on the council to buy houses and put local occupancy restrictions on them and said there were still simple loopholes for second home owners to avoid paying either council tax or business rates, so the authority looked set to “cut its own throat”.

However, Upper Dales member Councillor Yvonne Peacock said the policy was vital as many people could no longer afford to rent or buy properties in her division.

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The council’s executive member for finance, Cllr Gareth Dadd, said the premium would be levied consistently regardless of second home owners’ circumstances, so the authority could do all it could to incentivise people not to own second homes in the county.

He said there would always be exceptional cases and officers would have the ability to grant reductions if certain criteria were met.

Cllr Dadd said the overwhelming majority of second home owners would be faced with either releasing their properties into the rental market or providing funds for key council services.

Ahead of a majority of members passing the levy, he said while he did not support greater taxation, he was absolutely committed to the move which “would help local people to live and remain in the county”.