Why am I paying a council tax premium on my second home?

From 1 April 2025, billing authorities (district and unitary councils) in England will be able to charge a council tax premium of up to 100% (that is, up to 200% of the normal bill) on second homes.

What is a second home?

In the council tax system, a second home is defined as a property that is “occupied periodically”, for which “there is no resident of the dwelling, and the dwelling is substantially furnished”. This definition is provided in new section 11C of the Local Government Finance Act 1992.

How does the second homes premium work?

The 2025/26 financial year is the first year in which the council tax premium on second homes can be imposed by local authorities.

The second homes premium is different from the ‘empty homes premium’, which can be charged on properties that are “unoccupied and substantially unfurnished” (see section 11B of the Local Government Finance Act 1992).

With both the empty homes premium and the second homes premium, the billing authority (the district or unitary authority) makes the decision about how much premium to apply (if any), but the premium applies to the whole of a council tax bill. The billing authority must have given at least 12 months’ notice of its intention to charge the premium. There is no requirement to send any special notice or letter to council tax payers who might have to pay the premium.

The empty homes premium can only be charged once a property has been empty for 12 months. However, with second homes there is no grace period. A second homes premium can be charged as soon as a property meets the criteria.

Does every second home have to pay a premium?

This is up to the billing authority.

However, the government has created several exemptions from the second home premium.

There are 12-month exemptions for:

• properties where the occupant has died, from the date of a grant of probate
• properties being actively marketed for sale or let (this exemption cannot apply to a property for a second time until it has been sold, or let for at least six months)

There are permanent exemptions for:

• annexes that are being used as part of the main property
• properties that are empty because the owner is required to live in armed forces accommodation for employment purposes
• caravan pitches and boat moorings
• properties that cannot be used as a main home due to planning restrictions, either:

(a) preventing occupancy for a continuous period of at least 28 days in any one year period;

(b) specifying that the dwelling may be used for holiday let only; or

(c) preventing occupancy as a person’s sole or main residence.

These exemptions are explained at greater length in a government consultation response from 11 March 2024, and in statutory guidance on the second homes premium that the government published on 1 November 2024.

Note that these exemptions don’t have any effect on the standard council tax bill that is due on these categories of property. Billing authorities also have the power to exempt additional properties from a premium if they choose.

It would be possible for the first two exemptions in the list above to apply in succession. For instance, a property could attract a 12-month exemption following probate, followed by another 12-month exemption while it was being marketed for sale or let.

How will the second homes premium be implemented?

It is up to the billing authority (the district or unitary council) to decide whether a property falls into any of the exemption categories.

If a council tax payer thinks that their property should be exempt from the second homes premium but it is not, they can appeal to the Valuation Tribunal for England. Legal cases that clarify when exemptions should apply may emerge in the next few years.

The government’s statutory guidance on the implementation of the second homes premium from November 2024 sets out a number of factors that councils should take into account when deciding whether to set a second homes premium. These include:

• numbers and proportion of long-term empty dwellings and/or second homes in the local area

• circumstances which may affect whether the dwelling can be used as a main residence

• potential impact on local economies and the tourism industry

• potential impact on the local community

• potential impact on local services

• other measures that are available to councils to help bring empty dwellings back into use

Will the second homes premium reduce the number of second homes?

It is unclear whether the second homes premium will reduce the number of second homes.

However, the table below shows the number of properties that have been charged the empty homes premium since it was introduced in 2013.

Only a very small percentage of properties were charged less than the maximum premium when the empty homes premium was introduced. Changes in the law in 2018 allowed higher rates to be charged for properties that had been empty for 5 years (up to a maximum of 200% extra) and for 10 years (up to a maximum of 300% extra).

The jump in numbers in 2024/25 is likely attributable to a change in the law that came into effect in that year, which enabled the empty homes premium to be charged after a property had been empty for one year instead of two years.

These figures indicate that the total number of properties that have been charged a council tax premium have not fallen over time.

More information is available in the Library research briefing Council tax: empty properties.

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About the author: Mark Sandford is a researcher at the House of Commons Library, specialising in local government and devolution in England.

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