'Our dream of retiring to our second home by the seaside is turning into a nightmare'

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Fiona Wilson whose retirement dream of living in their £150k second home could end up in tatters -Credit:No credit

A couple fear their dream of retiring in their £150,000 second home will be shattered due to 'punishing' new tax rules that could see their tax bill double.

Fiona Wilson, 66, and her husband David, 68, bought their seaside property in Whitby, 14 years ago as a rental opportunity. The property was an addition to their main home in Potto, North Yorkshire, which they bought for £205,000 in 1999.

However, after retiring, they decided to make the Whitby property their second home, looking forward to frequent coastal trips. Now, they face a "punitive" tax increase that could cost them thousands or force them to sell the three-bedroom property.

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Fiona, a former teacher, and David, an ex-pharmacist, currently live in Potto, approximately 40 miles from Whitby. Fiona expressed her frustration, saying: "At the time of my retirement, we worked very hard, when we should be enjoying the products of our hard work, we are being punished."

The couple bought the cottage for £150,000 in 2010 with the intention of renting it out to holidaymakers to supplement their retirement income. Fiona explained: "We were both working full time. I was a teacher and my husband was a pharmacist.

"We deliberately bought it as a source of extra income to be used to supplement our retirement as part of a retirement plan."

The couple enjoyed low tax while the property was rented out, thanks to 100 per cent business rate relief. Upon retirement, they chose to keep the cottage for personal use rather than continue renting it out.

However, they were shocked to learn that the annual tax of £1,800 is set to nearly double to £4,000 by April 2025. This increase is due to North Yorkshire Council's introduction of a 'second home premium' charge of 100%, as part of the Levelling Up Act (2023).

Faced with this steep rise, Fiona is contemplating selling the property. She said: "It's going to cost an awful lot of money to keep the two homes."

She predicts that the property will likely be bought by someone intending to use it as a holiday let, adding: "We think the policy is flawed. [It's designed] to encourage people with second homes to put them on the market."

Fiona, a life-long Conservative voter, voiced her disappointment with her MP, Sir Robert Goodwill.

"It's totally unfair. It's un-Conservative to punish people who have worked very hard," she said. "I have no problem paying tax but on this occasion, this is a punitive tax. We can afford to pay the double tax - we just think it's very unfair."

Gary Fielding, North Yorkshire Council's corporate director for strategic resources, defended the new tax: He said: "The new council tax premium on second homes is a key part of North Yorkshire Council's strategy to help provide good quality, sustainable properties for residents."

"Coming into force on April 1 next year, the new scheme will effectively double council tax bills for second homeowners and will generate between £11.5 million and £16.5 million in additional council tax revenue.

"The ultimate aim, however, is to bring second homes back into use in communities where many people have been priced out of the housing market.

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"Areas along the east coast and within the Yorkshire Dales and North York Moors National Parks present particular issues. "Across the whole of North Yorkshire, more than three per cent of housing stock is comprised of second homes. This is twice the national average.

"But this figure rises to 7.5 per cent in the Scarborough area, which includes Whitby and Filey, and increases to at least 20 per cent in some locations when taking holiday lets into account. The impact of this is that the supply of housing, for both renters and first-time buyers, is greatly reduced and, where there is availability, this is often expensive and beyond the means of some people.

"The authority hopes to help address this issue by using funding generated from the council tax premium to introduce more housing in areas where there is the most need. North Yorkshire Council is proud to be one of the first local authorities to introduce such a pioneering policy and is confident it will help ensure communities have a sustainable future."

Sir Robert Goodwill, MP for Scarborough and Whitby, highlighted the housing crisis in Whitby, stating: "We do have a problem in Whitby with local people being priced out of the housing market. Second homes and holiday lets including Airbnb are having quite an impact."

He further elaborated on the consequences: "There have been a number of problems flowing from this including the fact that we currently have 42% surplus secondary school places in Whitby with one of the three school locations scheduled for closure."

Goodwill also touched upon the seasonal nature of occupancy: "Many second homes are only used in the summer which makes the survival of local shops, post offices and pubs in villages very difficult."

Addressing the challenges of development, he said: "It is almost impossible to get land for new building in Whitby which would deliver a proportion of social housing and the town is hemmed in by the North Yorks Moors National Park where new builds are pretty much ruled out."

Finally, he pointed out the council's strategy: "This policy from the North Yorkshire Council is aimed at freeing up housing for local people to buy. There are similar problems in the Dales too."

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