Gwynedd backs doubling council tax premium on second homes from April
Gareth Williams, local democracy reporter
The premium levied on owners of holiday homes and long term empty properties in Gwynedd will be doubled from April.
While second home owners already face premiums of 50%, it will rise to 100% from April after the cabinet-backed plans were supported by 38 to 16 during Thursday’s full council meeting.
A public consultation had found that 55.1% of respondents believed second homes brought “positive benefits.”
But with 58.6% being holiday home owners themselves, the majority of locals were found to be more concerned about their impact.
Several councillors were against increasing the premium to the maximum allowed by the Welsh Government, fearing it would result in an even greater rate of transfer from domestic to non-domestic rates.
Often described as a “loophole”, current laws allow any second home available for commercial letting as self-catering accommodation for 140 or more days in a year, and actually let for at least 70 days, to qualify for non-domestic rates rather than council tax.
This, according to the Welsh Local Government Association (WLGA), also allows them to be eligible for Small Business Rate Relief, often resulting in them not paying any taxes at all into the Welsh public purse.
Gwynedd – which has a higher percentage of second homes than any other county – has seen 2,106 properties “flip” since 2014, representing a loss of £286,000 of tax premium income every year which does not include the basic council tax which is also lost and a refund paid due to back-dating.
But despite this, members were told that the hiking of the premium would be expected to generate around £3m extra a year, and ploughed back into a £77m housing action plan designed to build more properties and clear an “ongoing emergency” and rising waiting lists.
Cllr Craig ab Iago, the portfolio holder for housing, pointed to council figures showing that 10.77% of Gwynedd’s housing stock is now designated as second homes.
He added that they had to prioritise the 60% of locals priced out of the market over those seeking a second home in Gwynedd.
A recent report by Dr Simon Brooks was also referred to, recommending 12 steps to tackle the issue in Welsh speaking areas but also warning that local authorities needed to increase the premiums to the maximum allowed level to strengthen their case for Welsh Government action.
But Cllr Sion Jones, who proposed sticking to the current 50%, warned that increasing the rate would only encourage more owners to find ways of avoiding the hike.
He added, “The flipping towards non-domestic is a major issue, but if we increase this to 100% I worry that a huge percentage will decide to transfer.”
Conceding that party colleagues in the Welsh Labour Government “hadn’t done enough to tackle the situation so far,” he added: “I fear this will lead to a loss of income in the long run.
“We should persist with 50% for this year and see what happens after May’s Senedd Elections.”
Cllr Dewi Owen said he would prefer to see a modest rise in the general council tax rate for all residents, saying he feared the move would appear to be “anti-social towards tourism”.
But Cllr Mair Rowlands argued that, with Swansea Council already looking to implement a 100% premium, “Gwynedd certainly should”, with so many locals being priced out in their own county.
“This isn’t a matter of punishing second home owners but to help fulfil a vision and a housing plan designed to tackle source of great social imbalance,” she added.
Cllr Gareth Thomas, the portfolio holder for economic development, added the need to differentiate between a second home and genuine holiday businesses.
He added, “We have asked the Welsh Government not to lump them together but I certainly don’t see this as an attack on tourism, as some have suggested.
“While second home owners undoubtedly spend in the area, it’s certainly not to the same degree as a family living in the property all year round.”
The new premium will come into force from April 2021.