High tax premiums on second home owners termed ‘politics of envy’ by local councillor

Bruce Sinclair, Local Democracy Reporter

A member of a council group has called for a 125 per cent tax premium on second home owners to be lowered, saying it’s motivated by “politics of envy”.

Pembrokeshire County Council rejected two calls to cut the second-home council tax premium at its October meeting.

Second-home owners will continue to pay a 125 per cent premium next financial year. Pembrokeshire’s second-home council tax premium has ranged from 50 per cent to 200 per cent over the years.

The premium applies to all three parts of the bill: the county council’s share, the police precept and town or community council charges.

Councillors backed a recommendation to keep the 125 per cent rate, but Conservative group leader Cllr Di Clements called for it to be cut to 100 per cent; that motion failed 28 votes to 23, followed by a compromise proposal for 115 per cent from Manorbier councillor Phil Kidney.

The vote was tied at 26-26, so presiding member Cllr Simon Hancock used his casting vote to reject the compromise. The 125 per cent rate was then approved by 29 votes to 21.

The council report said reducing the premium by 25 percentage points would increase financial pressures by about £1.4m.

A 2023 report to the national park identified parts of the county with high numbers of second homes, based on council tax data.

It highlighted high rates in many coastal communities, including 62.96 per cent in Little Haven.

Conservative councillors spoke out after a bid to cut the premium failed, leaving it at 125 per cent.

Contentious issue

St Florence councillor Rhys Jordan said: “Representing an area with a high proportion of second homes, I know just how contentious this issue is. But the reality is that the housing market is far more complicated than simply blaming second home ownership.

“The combination of the 182-day letting rule, higher interest rates, the cost of living and relatively low local wages has created a very difficult balancing act.”

The 182-day rules means that holiday homes must be let out for at least 182 days of the year to avoid paying council tax and qualify for non-domestic rates instead.

“I believe a 100 per cent premium strikes a fairer balance. It recognises the impact of second homes on our communities without placing an excessive burden on those who own them.

“My concern is that the council has become increasingly reliant on the additional income generated by these premiums, which were originally intended to help offset the impact of second home ownership on our communities.

“We must ask ourselves: are these premiums genuinely delivering the outcomes they were introduced to achieve, or have they simply become another source of income the council cannot afford to lose?

“For me, this has never been about defending second homes at all costs. It’s about fairness, evidence and finding a sensible balance that works for Pembrokeshire.”

Fellow Conservative councillor Cllr Aled Thomas said: “This administration is drunk on taxing every last penny out of Pembrokeshire taxpayers, rather than fixing the core issues we see across the county.

“Rather than focussing on spending the money gained on building new homes for the people of Pembrokeshire, the administration seems to prefer to drive up housing costs of affordable homes by buying homes out of the private market, making it more difficult for our younger generations to secure their first homes.

“The implementation of this policy has been an utter shambles from start to finish and is nothing more than the administration stoking division across the county with the politics of envy.”

Support affordable housing 

Responding, Cabinet member for finance, and former leader Cllr Jon Harvey, reiterated his opening remarks when presenting the 125 per cent proposal at the October meeting.

“It should be noted that a change in the level or use of the Second Homes Council Tax Premium will impact the funding available to support affordable housing, enhancing-Pembrokeshire initiatives and the council’s wider budget relating to affordable housing and enhancing the sustainability of local communities.

“Any reduction in premium levels would have a direct impact on the funding available for these purposes and result in a budget pressure for 2027-28 which would need to be met through budget savings, increased income, increase in council tax, or a combination of these.

“For example, a 25 per cent reduction in the second homes premium will result in a £1.4M additional pressure on the budget.”

At the meeting he had added: “I , therefore remain of the view that, retaining the premium at its current level of 125 per cent would continue to support the statutory objectives of increasing housing availability and enhancing community sustainability, whilst recognising the concerns raised through consultation and avoiding any further increase in taxation on second homeowners at a time of continuing uncertainty surrounding the classification and taxation of self-catering accommodation.

“As I outlined earlier, any reduction would create an additional budget pressure on the council.”

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