Owning a Second Home in Dorset

Council Tax Changes & Market Resurgence

The landscape of second-home ownership in Dorset is evolving, with new council tax changes coming into effect. Yet, despite these policy shifts, the appetite for second homes has increased as the year has progressed.

Council Tax Changes for Second Homes

As of April 1, 2025, Dorset Council has introduced a 100% premium on council tax for second homes. This means that owners of second homes will now pay double the standard council tax rate, significantly increasing the cost of maintaining a second property. The aim of this policy is to deter properties from sitting vacant and encourage more homes to be available for full-time residents.

Is it Possible to Avoid the Council Tax Premium for Second Homes?

Yes, in some cases, it is possible to avoid the second homes council tax levy. For properties that meet the business rates criteria—such as holiday lets that are available for commercial rental for at least 140 nights a year and let for at least 70 nights—council tax will not apply. Instead, these properties will be assessed under business rates, which are likely to be more financially favourable for owners.

Market Resurgence: The Second-Homes Boom

It’s fair to say that over the last few years, we have seen a steady decline in the number of properties purchased for the purpose of a second home. Throughout 2024, this profile of buyer had all but disappeared. Unsurprising, given the rising costs and additional tax barriers of owning an additional property. However, since the beginning of the year, we’ve seen the return of second-home buyers.

In March, we saw an overall 21% increase in buyer registrations compared to the previous year, and in our Wareham office, 30% of these buyers were specifically searching for a second home, whether for investment purposes or personal retreats. The rise from zero to 30% is a significant shift in the market and signals that, for many, the potential long-term value of property ownership in Dorset outweighs the increased costs imposed by the new tax regulations. So, despite these changes to council tax, the market for second homes in Dorset is far from slowing down. In fact, it’s thriving!

Strong Investment Potential

One of the driving factors behind this surge in demand is the robust earning potential of second homes that are operated as holiday lets. Our Wareham office has identified three properties currently on the market ideal for holiday rentals. Each of these show impressive returns, with projected annual incomes of up to £35,000 per annum, assuming they secure their forecasted 35-40 bookings per year. Given that each booking ranges from three to seven nights, each of these homes would likely fulfil the criteria of qualifying for business rates rather than council tax. 

Looking Ahead

With property continuing to be viewed as a solid investment and the clarity surrounding business rates offering reassurance to buyers, the demand for second homes in Dorset is unlikely to wane anytime soon. 

If you’re considering owning a second home in Dorset, now is an exciting time to explore your options. Whether for personal enjoyment or as a lucrative investment, Dorset’s property market continues to present compelling opportunities despite legislative changes. For more insights on the second-home market in Dorset or to discuss investment opportunities, feel free to get in touch!

Equally, if you’re selling a second home in Dorset, we probably have the perfect buyer already registered and ready to make the purchase. Start the process by visiting this page: Find Out How Much Your Home is Worth