Guardian columnist slams Welsh second homes tax ‘loophole’
A Guardian columnist has slammed a second homes tax “loophole” in Wales.
George Monbiot described second homes are a “gross injustice” and as a “luxury that deprives other people of a necessity” in an article the paper.
He criticised legislation which enabled second homeowners to register their properties as businesses to avoid higher levels of council tax that local authorities were able to impose.
Plaid Cymru MS Sian Gwenllian has called it a “loophole” and has called on the Welsh Government to close it.
In a column for The Guardian, he said: “In Wales, local authorities are able to charge double the rate of council tax for second homes.
“But, though this power is contained in Westminster legislation, it doesn’t apply to the rest of the UK.
“Even so, it’s of limited use, now that second homeowners have discovered that they can register as businesses, pay nothing at all, and be rewarded for it.
“We need a progressive property tax, based on value and payable by owners, not tenants. And second homes should be taxed at a much higher rate.”
This practice has been criticised by Plaid Cymru MS Sian Gwenllian.
In a column for Nation.Cymru she wrote: “There’s a secret scandal going on in Wales – and it’s causing serious inequality.
“Currently, because of a loophole, a great number of second-home owners can avoid paying taxes.
“By registering their second-homes as small businesses, these owners can not only avoid having to pay council tax but they also receive full business rate relief.
“This anomaly in the system, which has gone unchallenged for too long, is a scandal.
“Second home ownership is at the heart of widening wealth inequality. Research shows that nine in ten additional property owners are in the top half of the wealth distribution. But in Wales, second home owners have found a way to save money!
“The problem lies with Section 66 of the Local Government Finance Act 1988. This Act allows second home owners to transfer their properties out of the council tax system if they let their properties as self-catering accommodation for short periods of the year.”
Monbiot also wrote: “How big would our housing crisis be if it were not for second homes? It’s a question almost no one in public life wants to ask, let alone answer. But it becomes more urgent every day.
“By a second home, I don’t mean one continuously rented to another household. I mean a property used either as a personal holiday home or as a place to stay while working away from your main home: in other words, a luxury that deprives other people of a necessity.
“Before the pandemic, government figures show, 772,000 households in England had second homes.
“Of these, 495,000 were in the UK. The actual number of second homes is higher, as some households have more than one; my rough estimate is a little over 550,000.
“Since then Covid, Brexit and the growing realisation that you can monetise your extravagance by putting your second home on Airbnb when you’re not using it have triggered a gold rush.