Council “acted outside the law” when applying second homes council tax premium, Monitoring Officer finds

From April this year, local authorities in England were granted the power to charge additional council tax on second homes, and Warwick was amongst the councils who introduced the second homes premium.

The decision to apply the premium, and at what rate, is discretionary for each local authority.

However, following consideration, Warwick’s Monitoring Officer, Graham Leach, found that the charge for the second homes council tax premium was not correctly approved by Council, therefore the charge on properties was incorrectly applied.

The report, issued under section 5 of the Local Government & Housing Act 1989, noted: “To implement a second homes Council Tax premium, the Council is required to make a determination at least one year before the financial year it will apply from, to provide owners with sufficient notice. The determination needs to specify the % of premium that will apply, which can be up to 100%.”

S11C (4) of the Local Government Finance Act 1992 states that ‘In exercising its functions under this section a billing authority must have regard to any guidance issued by the Secretary of State’.

The guidance was issued by the Ministry of Housing, Communities and Local Government on 1 November 2024, and states that councils should “carefully consider” whether to charge a premium and assess possible impacts, including on the local population, its communities, and the local economy.

Examples of factors to consider are as follows:

• number and proportion of long-term empty dwellings and/or second homes in the 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…

The issue reported was identified following a question from a member of the public in respect of a second homes council tax premium charge.

The section 5 report said: “At this point the Monitoring Officer and S151 Officer sought legal advice, including Counsel’s advice due to the potential issues identified. The Counsel’s advice was provided on 20 November 2025. During the time of seeking the advice officers have been reviewing the impact for the Council and identifying the actions that need to be taken, so they can be implemented quickly post any decision by Council.

“The Council considered and approved the second homes Council Tax premium for implementation in February 2023. Council also set Council Tax in February 2024 and February 2025, none of these three decisions taken included the explicit determination of the % premium to be applied to second homes Council Tax.

“The Cabinet took a decision in February 2025 to adopt the second Homes Council Tax Policy and, whilst this included a clear statement of intention that the % premium would be 100%, there is no clear evidence that Cabinet considered the factors listed [in the bullet points above] and the % of the premium has not been formally approved by Council.”

The report said it was correct for Cabinet to set the policy but Council needed to be seen to be considering (“in the way Planning Committee considers how an application aligns to a Policy”) when taking the decision to set the second homes council tax premium.

The report said: “The Council now needs to consider [whether] to remedy this position by refunding to those people from whom it has collected the second homes Council Tax premium during this Financial Year. It should be noted while there are a number of properties who have paid the charge, there are a far greater number who the Second Homes Council Tax Premium applies to but where exemptions to the payment have been accepted. No money was collected from these properties but they will need to be notified, in due course, in respect of the determination for their property.”

The Monitoring Officer advised that to introduce the premium, the council needs to engage and consult with key stakeholders on the relevant factors. “If the Council is minded to introduce the premium this is seen as starting a fresh and therefore this would need to be undertaken.”

Leach noted that the introduction of the second homes Council Tax premium is worth circa £45,000 per annum to Warwick District Council.

The report stated: “This amount will have to be secured through other means when setting the budget for the Council for 2026/27.”

The report recommended “immediate actions” by the council to remedy the situation, which were set to be considered by full council at an extraordinary meeting yesterday (3 December).

Lottie Winson