Consultation launched on easing holiday let rules in Wales

Nation.Cymru staff

A consultation has been launched on proposed changes to the rules governing how holiday lets in Wales are treated for council tax and business rates.

The Welsh Government is seeking views on whether the requirement for self-catering properties to be let for at least 182 days a year should be reduced, as well as plans for five new exemptions from the occupancy rules.

Since April 2023, self-catering properties have generally had to be available to let for at least 252 days and actually let for at least 182 days during the previous 12 months to be classed as non-domestic and liable for business rates rather than council tax.

The tougher rules were introduced amid concerns about the growing number of properties being transferred from council tax to non-domestic rates and the impact of holiday accommodation on the supply of homes for local communities.

The number of self-catering properties listed for business rates almost trebled from around 4,000 in 2013 to more than 11,000 in 2023.

Since the higher occupancy threshold was introduced, that number has fallen to around 8,000.

However, the Welsh Government acknowledges that some established holiday accommodation businesses have struggled to reach 182 days despite being occupied for almost half the year and making what it describes as a “significant contribution” to local economies.

It said: “While the aims of the increased letting threshold are generally accepted, there has been a sustained debate about the level of increase and impact on genuine self-catering businesses.”

But ministers also argue that some properties which failed to meet the new requirement had previously been let for little more than 10 weeks a year.

The consultation document says: “In many cases, these properties may be better used as permanent homes for members of the local community.”

It adds that there is a “careful balance to strike” between supporting genuine tourism businesses and avoiding an oversupply of holiday accommodation.

The Welsh Government has indicated that any reduction is likely to be relatively modest, suggesting cutting the requirement by more than four weeks, to below 154 days, could undermine the purpose of the policy.

It said: “It is recognised that some operators have argued for a much lower threshold, but this could incentivise an over-supply of self-catering properties and not strike the optimal balance.”

Exemptions

The consultation is also seeking views on five proposed exemptions for properties which ministers recognise could not realistically be used as permanent homes.

These would cover holiday accommodation forming part of another business, large developments containing multiple self-catering units, properties subject to planning restrictions, accommodation within the grounds of an owner’s home and properties on the owner’s farm.

The first exemption could, for example, cover accommodation provided as part of a leisure park or wedding venue, while another would apply to aparthotels and serviced accommodation comprising at least five self-catering units.

Properties restricted by planning conditions to holiday use could also be exempt.

Another proposed exemption would cover accommodation such as annexes, converted outbuildings and lodges within the grounds of an owner’s main home, provided they are under the same registered title.

Farm diversification businesses could also benefit, with converted agricultural buildings and other holiday accommodation on farmland potentially exempted from the occupancy requirement.

However, properties covered by the exemptions would still have to be used as genuine self-catering accommodation and be available for commercial letting for at least 252 days a year.

Vacant properties

The exemptions would not apply to properties that are vacant or simply used periodically as second homes.

The Welsh Government will consider responses alongside other evidence before completing its review of the 182-day threshold by the end of the year.

Any legislative changes resulting from the review are intended to come into force on April 1, 2027.

The consultation closes on October 23

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