Property consultant denies second home owners are exploiting tax ‘loophole’

A property consultant has denied that second home owners are exploiting a tax “loophole” in Wales.

Angie Aitkenhead, an Independent Property Consultant at Sykes Holiday Cottages, said “there is no loophole” in response to suggestions that owners of second homes were threatening to use one in response to a proposed tax hike by Anglesey council.

The council looking to hike the levy on second homes from 35% to 50% next year, while planning to increase it further to 100% by 2024.

But a recent public consultation found that such a move would prompt 45% of second home owning respondents to try and transfer their properties to non-domestic status.

This has prompted further calls on the Welsh Government to shut what many regard as a tax “loophole.” But Aitkenhead has insisted that there is a “genuine application you have to make and criteria you have to meet before” the status of a property can be changed to enable an application for non-domestic business rates.

She also said that not all owners of second homes are “entitled rich English”.

Under current rules if a second home is available for commercial letting as self-catering accommodation for 140 or more days in a year, and actually let for at least 70 days, it qualifies to pay non-domestic rates rather than council tax.

Aitkenhead said: “How many more times, there no loophole!! There is a genuine application you have to make and criteria you have to meet before being able to register as a FHL thus being able to then apply for non-domestic business rates.

“1. Increase the criteria needed to be met, which any genuine FHL will be able to meet as a business.

“2. Get rid of the 100% rate relief for all small businesses, which let’s face it should be reviewed, this was introduced 20 years ago during foot and more and a review is long overdue.

“Not all second home owners are entitled rich English, there are many reasons why people end up with a second property and should not be tarred with the same brush. 80% of second home owners in Gwynedd live in Gwynedd.”

‘Under fire’ 

Cheshire-based Sykes, which owns Menai Holiday Cottages has previously come under fire from Ynys Mon MS Rhun ap Iorwerth in the Senedd.

He accused a holiday lettings firm of “encouraging” second home owners to exploit a “loophole” allowing them to avoid paying any council tax.

During a Senedd debate, he pointed to an “owners newsletter” sent out by the firm which also offers properties across much of Gwynedd and Anglesey.

While acknowledging its legality, Mr ap Iorwerth described the newsletter as “encouraging” second home owners to avoid paying local taxation by exploiting what many have described as a “loophole.”

The newsletter says: “For those of you not on small business rates, now is a better time than any to consider registering your second home as a Furnished Holiday Let (FHL) to claim tax relief.

“Take a look at our blog to find out if your property may be eligible.”

In response Chester-based Sykes, which owns Menai Holiday Cottages, said that the newsletter was sent to small tourism businesses who have suffered greatly during the pandemic, but stressed they would never encourage anyone to falsely claim tax relief they were not legally entitled to.

The popularity of many coastal communities as second home destinations has been seen as a major factor in the pricing out of many locals, with 7% of the island’s entire housing stock said to be empty for most of the year.

Figures from the 2011 census showed that 43% of homes in Rhosneigr and 34% in Trearddur Bay were empty for most of the year, but campaigners believe that the ratio is now as high as 70% in some villages.