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Petition launched to prevent second home owners exploiting tax loophole

07 Mar 2019 3 minute read
Abersoch, where there are a high number of second homes.

A petition has been launched to close a legal loophole which allows second home owners in Wales to avoid paying neither council tax nor business rates.

800 second home owners in Gwynedd are now exploiting a legal loophole to avoid paying any council tax at all by registering their properties as small businesses.

The petition calls on the National Assembly for Wales to urge the Welsh Government to take immediate steps to close the legal loophole

The petition can be seen here.

The change is needed “at a time when local councils are forced to increase council tax to local ratepayers to plug the shortfall in their budgets,” the petition, set up by Alun Roberts, says.

“They are also exempt from paying business rates because of an anomaly in the system which categorises them as ‘small businesses’ although they are used as second homes for most of the year.

“In this financial year, this equates to a loss of £1.5M from the public purse in Gwynedd alone; money that could be used towards providing social housing for local people.”

Last month Assembly Member for Arfon, Siân Gwenllian, warned that young families are being priced out of the housing market by the loophole.

Se said there are 2,000 families currently on the housing waiting register in Gwynedd.

“There are now 5,000 second homes in Gwynedd – more than in any other county in Wales,” she said.

“Undoubtedly some second home owners contribute to the local economy, but many spend very little in our shops and businesses.

“But 800 second home owners are now exploiting a legal loophole to avoid paying any council tax at all by registering their properties as small businesses. To rub salt in the wound, they are also exempt from paying business rates as a result of an anomaly in the system.

“To qualify as a ‘business’, the second home must be available to let for 140 days a year. How that is monitored is unclear and I hear stories of second home owners openly flaunting this rule, or ‘letting’ the property to family or friends.

“This is scandalous, and the loophole needs to be closed. Whilst this unethical practice is allowed to continue, I have constituents coming to see me desperate to move to social housing from unsuitable accommodation.

“Buying a house is not an option for those on the housing waiting list and, in some areas, the high percentage of second homes has even slowly pushed up house prices beyond the reach of local families on what can be described as decent salaries.”

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