Proposals by the government to attempt to close a loophole which has allowed thousands of second-home owners to avoid paying council tax have been welcomed by Suffolk politicians.

The Ministry for Housing, Communities and Local Government has launched a review of a business rates loophole which has allowed the owners of some second homes to register as businesses, claiming their property is available for “holiday accommodation” for part of the year.

That means they have to pay business rates, on which they can get small business rate relief, rather than council tax – meaning local authorities can lose hundreds of thousands of pounds.

In Southwold, where 60% of the properties are second homes, this was a hot topic during a by-election in the summer which saw Liberal Democrat David Beavan elected to Waveney District Council.

He has campaigned for a long time to close the loophole and welcomed the government announcement. He said: “There is a real problem with the number of second homes in the area – there are more second homes in Southwold than anywhere else.

“I am glad the government is looking at this. It should have been reviewed years ago. I have nothing against people who live here much of the time or those who run real holiday lets – they bring a lot of money into the area.

“But too many second homes are just left empty for almost all the year and do nothing except push up property prices.”

Mr Beavan said the average house in Southwold now costs 20 times the average salary, making it totally unaffordable for most people.

Waveney District Council’s Conservative leader Mark Bee also welcomed the government announcement, saying: “The extra money this would bring in isn’t that significant for us, but it is a loophole that should be closed and I am pleased that the government is looking to see what they can do about this.”

Local government minister Rishi Sunak MP said: “We’re aware of concerns that the current arrangements for valuing second homes for business rates and claiming relief do not provide strong enough protections against abuse.”

And Suffolk Coastal MP Dr Therese Coffey added: “I very much welcome the Government consultation to close this particular loophole, which could be costing our councils in lost council tax revenue – and previously raised it with the Minister.

“Second home owners are really important to the local economy here through their own spending or by bringing in tourists who support local businesses.

“Many of them already pay council tax. What this proposal does is to ensure any second home owner that claims business rate relief is actually entitled to it, by proving they are letting their property – and those that aren’t should be paying council tax.”

The government consultation runs until January 16 and people can have their say by visiting the Department’s website.