Council Tax Triples for Holiday Home Landlords (Wales)

Holiday lets and second homeowners face a 300 per cent council tax rise from April 2023 as the Welsh Government tries to make more affordable homes available to locals. 

According to official figures, 23,000 homes in Wales stand empty most of the time as second homes - and the number does not include thousands more properties controversially registered as holiday lets which qualify for business rates. These homes will pay the extra council tax and holiday lets that fail to meet strict occupancy and availability criteria.

The new rules are part of a Welsh Government campaign to ensure people can buy an affordable home in the place where they grew up.

The new Welsh council tax rules

The new measure overhauls council tax empty home rules from April 1, 2023. 

A local authority can charge a homeowner with an empty property for 100 days or more up to double the standard council tax rate. 

For example, a Band B cottage in Gwynedd pays council tax of around £1,485. If the cottage is a second home empty for 100 days, the council can double the charge to £2,970. 

Under the new rules, the charge rises from 100 per cent of the standard rate to 300 per cent. The rules for self-catering holiday lets paying business rates also change. To qualify for business rates, a home must be available to let for 140 days a year and allow guests for 70 days. From April 2023, these thresholds increase to 252 days available for let and 182 days let in any rolling 12 months.

Planning shake-up for holiday lets

The Welsh Government has already announced a change in planning laws for holiday lets on June 22. As second homes and holiday lets are not defined under current planning rules, the government is re-writing them, so switching a lived-in home to a second home or a holiday let needs planning permission. 

Councillors considering the change of use must consider the balance of primary and second homes in a neighbourhood before deciding. 

Property professionals fear the measure will need a pre-purchase planning application, adding costs and weeks to the conveyancing process. The estate agent trade body Propertymark argues the change may disrupt the local property market as sales will fall through, holding up sale chains.

What the property experts say

A Propertymark statement said: 

“We do not believe that use of a dwelling as a second home for private use constitutes development. Secondly, there is not enough evidence that an additional layer of bureaucracy will have anything other than a negligible impact on issues raised over second homeownership. 

“Purchasers of additional homes are already subject to the higher rate of Land Transaction Tax (LTT), and councils have powers to charge up to a 100 per cent premium on Council Tax, but the majority choose not to do so, and we need to understand why. 

“The Welsh Government has proposed several responses in response to a perceived problem without fully understanding it, and it must determine what exactly it is seeking to achieve before any far-reaching changes are made.” 

Second Home Owners - Wales is a Facebook group lobbying the Welsh Government about taxes on an investment property. A post from the administrator said: 

“To blame second homeowners for the issues that are countrywide is somewhat blinkered and short-sighted. We need to dig deeper than blaming second homeowners to understand the housing crisis. Perhaps we should look in more depth at our local councils, whose commitment to solving the issues is questionable and politically based.

What the Welsh Government says

Minister for Finance and Local Government Rebecca Evans said: 

“These changes will give more flexibility to local authorities and provide more support to local communities in addressing the negative impacts that second homes and long-term empty properties can have.They are some of the levers we have available to us as we seek to create a fairer system. 

“We will continue to make every effort to increase the supply and availability of houses, as shown by the £1bn of funding to build 20,000 low carbon social homes, contained in the budget I published at the end of last year.”