New Revenue for Councils from Tax on Second Homes

Most people who own second homes in North Norfolk will pay 90% of the full amount of council tax from April, District Councillors decided on 21 January.

At a special Full Council meeting, NNDC ruled that the council tax discount on second homes should be cut from 50 per cent to 10 per cent - a new power it was given by the Local Government Act 2003.

The Act specified that a discount of at least 10 per cent must still be given on second homes, but the actual amount was left to local authorities to decide. The current discount of 50 per cent was set nationally, not by individual councils.

NNDC decided to charge the owners of most second homes the maximum allowed under the 2003 Act, potentially bringing in an extra £1.6 million in council tax revenue in the next financial year, of which about £180,000 would go to NNDC.

Of any normal North Norfolk council tax bill, only about 10 per cent is kept by the District Council (a similar amount is used to fund the police, a small amount goes to the taxpayer's parish council, and the remainder funds County Council services). But a deal negotiated with Norfolk County Council means that the bulk of that extra revenue will be ploughed back into North Norfolk communities through the Local Strategic Partnership - a group of authorities (including NNDC and the County Council), agencies and organisations providing basic services to local people.

There are exceptions to the change in the discount for 2004/05. The Act says councils must continue to give a 50 per cent discount on 'tied' accommodation (where an employer provides the accommodation as part of a person's job).

Also, NNDC decided not to change the discount on certain properties that cannot be occupied all-year-round, for example because they have certain planning conditions attached (generally holiday chalets and the like).

Also, councils can remove the discount completely on long-term empty properties, which NNDC will do. These properties will continue to be exempt from council tax for the first six months they are empty, but the full council tax amount will be charged thereafter. However, local authorities will only keep the extra revenue from tax on empty properties in 2004/05 - after that, it will effectively go direct to the Government.

Council Leader John Sweeney said: "We Liberal Democrats believe that council tax is not a very fair or sustainable tax, but this move makes it more equitable across the District.

"The extra money generated will be very welcome in our endeavours to meet our targets for affordable and social housing in the area - that's where we envisage the money will be spent."

NOTES TO EDITOR

• The District Council portion of the average band D council tax in North Norfolk in2003/04 stands at £129.79. This is out of a total bill of £1130.86, which includes an average of the parish precepts (these differ from parish to parish).
• North Norfolk has roughly 50,000 households, of which about 10 per cent are second homes or holiday homes.

ENDS