The success of Dorset’s second-home premium now raises a more difficult question, as residents look for clearer answers on how that money is actually being used
When Dorset Council doubled council tax on second homes in April 2025, it expected to raise around £8 million a year. Instead, it collected £12.6 million. The question is: where has the extra money gone?
Second homes are often blamed for the rise in house prices in the West Country, for turning coastal villages into abandoned settlements in the winter, and for making home ownership a pipe-dream for many young locals. When Dorset Council, along with several other local authorities, announced that owners of second homes would be charged double council tax, many county residents strongly supported the policy.
There are approximately 6,000 second homes in Dorset, with a further 5,110 in the Bournemouth, Christchurch and Poole Council area. However, this does not reflect the true figure because some owners have claimed exemptions by declaring their properties as commercial holiday lets. The second-home premium introduced in 2025 generated £12.6 million in its first year – substantially more than the council had anticipated. Despite the additional revenue, exactly how much has been spent on housing – and where the remainder has gone – is not immediately clear from the council’s published budgets.
Where it went
In 2024, Cllr Jill Haynes (Cons) put forward the proposals for a second home tax and Nick Ireland (LibDem, now the council leader) proposed that 40 per cent of the income from the tax should be allocated to affordable housing, with any unused revenue transferred to housing reserves. At the council’s May meeting, Cllr Haynes asked how the money had been spent. Housing spokesperson Cllr Gill Taylor said that some of the money had indeed been spent on housing projects. She also confirmed that of the £12.6 million, £10 million was Dorset Council’s share, with the remainder allocated to the police, fire service, and town and parish councils. The budget confirmed at the full council in February 2025 that £3.95 million had been allocated to housing budgets, well in excess of 40 per cent of the original anticipated income.
Cllr Taylor said: ‘Capital spend was utilised to support the development of a number of successful schemes including West Farm, Hardy House, The Haven, Penrose and The Bus Shelter. In total, these schemes provided a total of 25 units of temporary accommodation, with a combination of shared and self-contained units, for homeless households. These units provided accommodation for families, young people, rough sleepers, and women (only). Funding was also allocated to bring forward the Extra Care development in Wareham. This remains unspent at the moment, but will be carried over as new proposals are brought forward. These schemes have cost a total of £3.216m to date.
‘Looking at the 26/27 budget, we have made an additional commitment of £1.4m (in addition to the recurring £3.95m) to reflect our council priority to provide affordable and high quality housing.’
And the rest
Following Freedom of Information requests to Dorset Council, Dorset Police and Dorset and Wiltshire Fire and Rescue to get more detail on the money allocated to them from double council tax payments by Dorset Life, Dorset Council sent this statement:
‘The extra income from the second homes premium isn’t paid out as a separate cash amount to preceptors. Instead, it’s built into the council tax system by increasing the taxbase. That means preceptors benefit automatically through a higher taxbase figure, rather than receiving a direct payment.
‘When you pay a council tax premium on a second home, that money is added to the council’s general fund, not directly to social housing. This fund covers a wide range of services and there is no mechanism to relate exact payments to specific services.’
Although Dorset Council did not identify the amounts allocated to the police and fire service, Dorset & Wiltshire Fire and Rescue confirmed that it had received £360,324 from the double council tax charges. The funding was not allocated to any specific purpose but went into the general balanced budget. The figure represents around 2.8 per cent of the total second-home premium raised in Dorset. At a time when the Fire Authority is consulting on station closures because of financial pressures, some residents may question whether a greater proportion of this revenue might have been directed towards frontline services.
At the time of publication, Dorset Police had not responded. Dorset Council will clearly have other pressures on budgets, including raised National Insurance contributions and commitments to adult social care and SEND. That still leaves several million pounds of additional revenue being spent elsewhere within council budgets. With financial pressures increasing on residents, including council tax, should there be more transparency over where the additional funding ends up?
View from the other side
Sam Scott owns a second home in Dorset but also lives in another tourism hotspot in Sussex. She does not think second-home owners contribute a lot to the local economy: ‘We spend very little,’ she says. ‘We cook at home, swim in the sea, hike, surf … all free. At home, in my long experience, the only real money coming in locally is in takeaways and pubs. And I honestly think the very lengthy and costly clear up negates any benefit – we locals stop going out or spending anything at all until the holidaymakers have gone.’
However, her experience of living in a tourism hot-spot has brought her support for double council tax.
‘I think it is essential. I know one of our tiny little ‘wealthy’ villages here in Sussex is, in fact, one of the poorest in the country. Because it’s so full of second homes, very little council tax was paid for years. Plus, there’s the issue of local folk being put in council houses far from home as there is no way they can afford to live here.’
The second-home premium was introduced with broad public support and has generated considerably more income than expected. The question now is not whether it raises money, but whether residents can clearly see where that additional revenue is being spent – and how it is improving the services it was intended to support.
