Second homeowners set for £191m windfall from Omicron grants

Second homeowners with properties listed as holiday lets are set for a £191 million windfall (David Davies/PA) (PA Archive)

Second homeowners who have flipped their holiday homes into lettings businesses are set to secure about £191 million of new pandemic grants from the Government despite a new crackdown.

Councils across England have started distributing £635 million in grants to businesses affected by the Government’s Plan B restrictions and caution over the spread of the Omicron variant.

However, new analysis by property tax specialists at Altus Group has found that almost a third of this funding pot will go to property owners who have flipped their holiday retreats.

The advisory firm said holiday home owners are able to save tens of millions of pounds by taking advantage of the Government’s small business rates relief scheme by paying little or no tax.

Owners of holiday homes, who make their properties available to rent for 140 days of the year, are entitled to claim 100% small business rates relief if properties have a rateable value of less than £12,000 meaning that they pay no business rates or council tax.

Hospitality, leisure and accommodation firms which were hit by Omicron can now apply for one-off grants of up to £6,000 for each of their properties, depending on its business rates valuation, after the Government delivered funding to councils last week.

Those business premises, which specifically covers holiday homes, with a rateable value of exactly £15,000 or below will receive a payment of £2,667 whilst those with a rateable value over £15,000 but less than £51,000 will receive £4,000.

The maximum grant of £6,000 is available for those businesses occupying properties with a rateable value of exactly £51,000 or above.

Altus said there are now 70,729 homes in England classified as holiday homes which have been flipped to “commercial” premises, up from 56,102 just before the start of the pandemic in March 2020, and which are now entitled to £190.61 million in Omicron grants.

The Government has announced that from April 2023, second homeowners will have to prove holiday lets are not just being made available for 140 days year but are also actually being rented out for a minimum of 70 days a year to access the relief.

Robert Hayton, UK president of Altus Group, said: “That change will mean second home owners would no longer be able to avoid paying business rates or council tax and entitled to business support by simply declaring that their property is available to let but making little or no effort to let it out.”

Michael Gove Secretary of State for Levelling Up, said: “We will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost.”