Council tax on second homes could be doubled in Kensington and Chelsea borough – an area with the highest number of second homes in the capital.
According to government figures, there are 7,898 second homes in the borough, far outnumbering the 2,443 in Wandsworth, which has already brought in the higher tax. Third up is Tower Hamlets, which has 7,567 second homes.
Kensington and Chelsea council said it was a decision they are considering “reluctantly” due to the Government’s Fair Funding Review, which aims to reform council funding.
Labour has said it wants to use the reviews to syphon off funds from affluent councils and towards more deprived ones.
By introducing a council tax premium, the average second homeowner in Kensington and Chelsea an average band D property, could pay bills of £3,184.
The Tory-run council opted against introducing the premium earlier this year.
Since this announcement, the council’s leader, Elizabeth Campbell, said: “I cannot sugarcoat the financial situation we are facing. As it stands, the Government’s fair funding formula ignores the cost of housing in the capital city, and the impact that has on deprivation.”
Cllr Campbell said that the loss of this income, alongside “rising costs of delivering council services”, means that councillors will have to pull in savings of £130m over the next four years.
According to the council’s draft budget papers for 2025-26: “Given the financial position the Government’s funding cuts have put the council in, we are now also reluctantly considering charging a council tax premium on second homes within the borough as well as exploring difficult options around reducing our council tax reduction scheme.”
Conservative councillor Cem Kemahli told the Telegraph that the reason the levy was not introduced in April was because of the council’s commitment “not to place any further tax burdens on our residents, unless absolutely necessary.”
Double council tax on second homes was introduced by over 200 local authorities in April, thanks to Michael Gove’s Levelling Up and Regeneration Act in 2023.
The policy was designed to solve the housing crisis and create property options for locals, but it’s now being accused of being designed for the sole purpose of injecting cash into the pockets of struggling councils.
Shadow local government minister David Simmonds said, “Labour is penalising councils that charge lower council tax and moving funding into areas that have higher rates.
“Conservative councils like Kensington and Chelsea have kept council tax low for residents and now, under the Government’s so-called fair funding reforms, they will face severe cuts.
“A report by the body found that London councils overspent by £180m on adult social care, £150m on children’s social care, and an enormous £270m on homelessness (a figure that has doubled in 12 months).”
This came after the council opted to reduce its staff pension contributions to zero for 2025-26, which saved almost £10m.
The Kensington and Chelsea town hall has appealed on its website to urge locals to “help us meet our biggest budget challenge ever”.
The report on the council’s budget said: “The council is being forced to look at charging residents with second homes an additional council tax premium.
“Although it has been widely reported that around 75 per cent of councils are already applying this premium, the council is proud of its record of keeping taxes low for its residents, so any decision on it will not be taken lightly and shared by all of our residents.”
A spokesperson for the Ministry for Housing, Communities and Local Government said: “It is for individual councils to decide to introduce a second homes premium, and we have made available nearly £230m for the Kensington and Chelsea council this year to deliver public services.
“We will also fix the outdated and unfair funding system we inherited, so funding matches local people’s needs and councils deliver better public services.”
