The first article in this series looked at the rise of the second home and short let economy. This one turns to how the law has responded, and what councils in England and Wales can now do.

The policy response

What the law now allows councils to do

For years, councils in second-home hotspots watched the short-let boom unfold with limited tools to respond. The council tax system, largely unchanged in its structure since 1993, was not designed for a world of Airbnb and holiday investment portfolios. Second homes often enjoyed the same, or in some periods lower, tax treatment as primary residences, despite contributing far less to the fabric of the communities they occupied for only part of the year.

That began to change with the Levelling-up and Regeneration Act (LURA) 2023, which gave councils in England two new sets of powers. From 1 April 2024, the threshold for applying a premium on long-term empty homes was reduced from two years to one. From 1 April 2025, councils gained an entirely new power to charge a premium on second homes. In England, the current structure allows councils to apply:

  • A premium of up to 100% on second homes (properties substantially furnished but with no resident, where the dwelling is not anyone’s sole or main residence), from April 2025
  • A premium of up to 100% on properties empty for between one and five years, from April 2024
  • A premium of up to 200% on properties empty for between five and ten years
  • A premium of up to 300% on properties empty for ten years or more

Wales moved earlier and has gone further. From April 2017, Welsh councils gained the power to charge premiums of up to 100% on second homes and long-term empty properties under the Housing (Wales) Act 2014. From 1 April 2023, those powers were extended under The Council Tax (Long-term Empty Dwellings and Dwellings Occupied Periodically) (Wales) Regulations 2022, raising the maximum premium to 300% for both classes. Unlike in England, where the 300% rate is reserved for properties empty for ten years or more, the Welsh maximum can be applied immediately on qualifying properties. It is for each Welsh council to decide the level it sets, up to that maximum. Gwynedd was among the first to act, raising its second home premium to 150% from April 2023.

The intent behind the legislation

The policy goal is twofold: to raise revenue for councils under sustained financial pressure, and to disincentivise the long-term removal of properties from the local housing market. Whether it will achieve the latter is debated. Some evidence from Wales suggests a proportion of owners simply switched from council tax liability to business rates by registering as holiday lets. But as a revenue mechanism, the potential is significant.

The catch: powers are only as good as the data behind them

The legislation does not, on its own, solve the harder problem behind premium collection: identifying which properties genuinely qualify. Councils have the policy levers, but limited visibility into the underlying status of any individual property. An owner can move a second home onto the business rates list by registering it as a furnished holiday let with the Valuation Office Agency, removing council tax liability entirely (and with it any premium). Others rely on the statutory exceptions, such as marketing the property for sale or let, which can suspend the premium for up to a year. Without the data intelligence to interrogate those claims, the new powers risk being less effective than the headline figures suggest.

“The legislation is a significant step forward. Councils now have the tools they’ve spent years asking for. But we’re already seeing a pattern where the owners most likely to owe a premium are also the ones most motivated to avoid it, and the gap between what councils are legally entitled to collect and what they’re actually collecting is material.”

Gareth Chen-Rees – Director, Local Government and Data, Infoshare+

Next, we look beyond second homes at the wider premium opportunity, and the scale of the revenue at stake.

The full report, The hidden housing economy: how second homes and short lets are reshaping council tax revenue, sets out the full picture. Download the full report.

If you would like to talk through what it means for your authority, contact us.