Second homes may be liable for full council tax

Plans for town halls to levy the full council tax on second homes could be finally unveiled by the government next month amid growing concern that local people are increasingly priced out of the rural housing market.

A draft bill is likely to give authorities the option of charging the full tax on 500,000 properties, either empty or partly used, which currently benefit from a 50% discount. It is not clear whether they will be able to plough proceeds into badly needed low cost housing for people on average incomes.

The move, which follows a long campaign by councils in the Lake District and beyond, comes as the government's countryside agency warns of a growing crisis, with rural people having to devote almost twice as much of their income to housing as those in cities and towns.

In its annual "state of the countryside report" today, the agency has included a mortgage index, using average earnings and house prices, to show that in seven out of eight English regions rural properties are much less affordable than in urban areas.

Ewen Cameron, a Somerset landowner and agency chairman, said the figures confirmed that 57% of rural people would have to commit more than half their income to a mortgage against 32% of urban residents.

Mr Cameron, the prime minister's main rural adviser, warned that with a much lower availability of social housing for renting in the countryside - 14% against 23% in urban areas - rural England risked becoming the "preserve of the wealthy, threatening the whole nature of rural communities and the viability of services," such as schools, post offices, and small hospitals.

Problems have been compounded by the sale of tens of thousands of rural council houses under the Tory government's right to buy' policy for tenants. Some have ended up as second homes, creating a growing housing shortage.

The Rural Housing Trust, which advises the countryside agency, estimates 50,000 new homes are needed in the shires. But big cuts in the budget of the housing corporation, the quango which supports social housing, mean that funding allocations for small village building schemes peaked at 2,399 homes in 1994-95 - and only 1,341 went up last year.

Campaigners believe that levying the full council tax on second homes could help to stabilise prices, putting more houses within reach of people on average incomes. Moira Constable, chief executive of the trust, estimates that ending the 50% discount could net £700m a year.

She reckons that on current figures collecting the full council tax would help build an extra 5,700 affordable homes annually "for local people priced out of the housing market by incomers."

Such a measure, she insists, is neither vindictive nor punitive against part time residents. Some bought goods and services locally, but it was cruel and unjust that they did not contribute in full to the cost of providing local services, "including affordable first homes for local people."