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New tax will hurt holiday home owners
12:27pm Monday 23rd April 2012 in Opinion
Since the Budget, much has been made in the media of the proposed ‘pasty tax’ and ‘granny tax’ while another tax seems to have slipped unnoticed through the net.
At a time when Britain is hosting the biggest show on earth this summer and the Government has unveiled a £2m campaign encouraging people to holiday at home, why are they then introducing a new, costly tax on holiday parks and holiday home owners?
The decision to start charging VAT at 20 per cent on the sale of static holiday homes from October 1, 2012, has the potential to have a devastating effect on the holiday and leisure industry in the Lake District and throughout the country.
Our company, South Lakeland Parks, which operate nine parks across the Lake District and Lancashire, attracts more than 40,000 people into the area each year to visit local attractions, eat in cafes, restaurants and bars, and spend in local shops.
Many of these being owners making multiple trips to their holiday home every month.
The importance of holiday parks to an area; particularly coastal and rural areas, is often overlooked.
But a national tourist board study found that each privately owned holiday caravan produces annual spending in the local economy of more than £6,400, rising to £18,500 for caravans that are rented out to holidaymakers on a weekly or fortnightly basis.
For our parks alone, that is potentially a spend of anything between £13 million to £40 million in the area each year.
If the Government presses ahead with this new ‘holiday tax’, we can expect to see a drop in demand for holiday homes of around 30 per cent – impacting upon customer choice and driving up the overall cost of holidaying.
Also, earlier this year, VAT was introduced on local rates charges, meaning that owners are already having to find around an extra £100 each year for owning a holiday home.
So this is yet again another attack on the sector, which will not only price people out of the holiday home market, it will price them out of the UK for their holidays.
However, this does not solely impact on tourism, it is also a kick in the teeth to the local, affordable housing policies that our politicians are always keen to shout about.
Why? Well, put simply, a 20 per cent hike to the cost of static holiday homes effectively makes bricks and mortar properties more attractive to second home owners looking for a property in the Lakes.
So this, in turn, will increase demand for and drive up the cost of standard housing for local people who want nothing more than to be able to both live and work in the same area.
Whereas, without the VAT increase, the holiday caravans and lodges on parks offer a viable alternative to buying up limited and sought-after properties around the Lake District as second homes.
The biggest frustration is that this has been sprung upon the industry with no consultation or advance warning for us to be able to plan and evaluate the impact on our owners, holidaymakers and suppliers.
Yes, we have now been given a six-week consultation period, but surely it is no coincidence that this started in the run up to the Easter holidays – one of the busiest times of the year for holiday parks.
As a member of The British Homes & Holiday Parks Association (BH&HPA), the organisation that represents the UK Parks industry, we support their proposal that if the tax is not shelved, then it is at least phased in to give everyone in the industry more time to prepare.
- Managing Director at South Lakeland Parks NIGEL WIMPENNY