English local councils have been able to charge premium council taxes on second homes, since 1 April 2025. Although some second homes are exempt from the premium.
Councils may charge a council tax premium of up to 100%. In other words, up to double the normal bill. We explore how this works, now the dust has settled.
What Is a Second Home in England?
A second home is a property that is occupied periodically. There is no permanent resident, although the building has adequate furniture. In other words, the owner could live there permanently if they so wished.
How Does the Premium Tax Work?
Councils may charge the premium tax on second homes from the start of the 2025/26 financial year. This tax varies from the empty homes premium on properties that are unoccupied and substantially unfurnished.
- The billing authority decides on the premium council taxes on second homes in both instances. It applies this percentage to the whole of a council tax bill.
- But the billing authority must have provided at least twelve months’ notice of its intention to charge the premium.
- Although there is no need to a send a special notice to council tax payers who may have to pay the surcharge.
- A council may only levy an empty home premium after it has been unoccupied for a year. However, the second home premium then applies immediately.
Must Every Second Home Pay a Premium?
Applying premium council taxes on second homes is at the discretion of the billing authority. Although the government did create several exemptions from second-home premiums.
There are several twelve-month exemptions on properties where the occupant has died, counted from the date of grant of probate:
- An exemption only applies to properties that are actively on the market for sale or let.There are no extensions for this concession.
- There are permanent exemptions for annexes to buildings that are being used as part of the main property.
- The property is empty because the owner must live in armed forces accommodation for employment purposes.
- Properties that cannot be used as a main home due to planning restrictions that:
– Prevent occupancy for a continuous period of at least 28 days in any year.
– Specify that the dwelling may only be occupied as a holiday let.
– Restrictions that prevent occupation as a person’s sole or main residence.
Please follow this link to learn more about exemptions from premium council taxes on second homes. However, none of these additional rules have any effect on standard council tax. Although councils do have authority to exempt additional properties from a premium, if they so choose.
The first two exemptions in our bullet list may apply one after the other. In this case, the twelve-month exemption for marketing could follow the twelve-months after probate.
How Councils Implement Premium Taxes
A council may decide whether a property falls into any of the exemption categories. However, if a council tax payer believes they are exempt from some or all premium council taxes on second homes, they may appeal to the Valuation Tribunal for England.
There is obviously not much case law available on this topic yet. Although the government’s statutory guidance on the implementation of the second homes premium do provide some guidance.
This advice outlines a number of factors that councils should consider when determining second home premiums:
- The number and proportion of long-term empty dwellings and / or second homes in the local area.
- Any circumstances which may affect whether a dwelling can be used as a main residence,
- The potential impact on the local economy, the tourism industry, the local community, and local services.
- Will the second home premium actually reduce the number of second homes?
- Alternative strategies to help bring empty dwellings back into use, and so reinforce the above factors.
Will This Increase Home Occupancy?
This is a matter of opinion, because of the short period these new rules have been in place. Perhaps we should ask ourselves, do we really need the costs attached to owning a second building we seldom use?
What about if we sold it to redeem the capital value. There may be many other options that turn out far more attractive. Although the clincher could be, how much is the second property is actually worth on the real market.
Avery Associates could arrange an independent assessment of the actual value, taking account of factors many estate agents seldom consider. We have no ulterior motives at Avery Associates, because we are not in the real estate business.
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