A row has broken out in one of the UK’s biggest second home locations over the switching of properties’ designation to short-term holiday lets.

Cornwall Council is complaining because some second home owners, having made the switch in designation, are now making backdated council tax refund claims. 

The council says it’s cost some £10m so far this financial year and housing activists have branded the move as “outrageous”. 

The sums involved are larger than may be expected because the law allows owners whose properties qualify as a short-term let and have a rateable value below £12,000 to be eligible to have their previous council tax refunded retrospectively over a period of more than 30 years.

Cornwall Council independent councillor Adam Paynter has told the BBC: “It’s a huge loophole, which in this financial year has cost over £10m. The council loses out because we only get compensated for three years of retrospective business rates.”

Ben Maguire, Liberal Democrat MP for North Cornwall, calls the system “absolutely crazy” and adds: “We’re talking about millions and millions of pounds in lost revenue to Cornwall Council, which at the moment is really struggling financially.

“That’s why we need my Airbnb Bill so that second homeowners can’t flip their properties, they can’t avoid paying tax.”

But Katie Warren, from industry body the Cornwall Self-Catering Collective, has told the BBC that such businesses are vital to Cornwall’s economy. 

“They have to fill out genuine criteria in order to be a holiday let that receives small business rate relief – so they have to go through that process in order to qualify.

“They contribute greatly to the Cornwall visitor economy and provide jobs so therefore they should be treated as businesses.

“If you lose the bed stock by minimising holiday lets in Cornwall, how is that going to affect all the other tourist business that are here?

“One in five jobs in Cornwall are supported by tourism, and I’m afraid holiday lets are a huge part of that.”