Second home-owner calls for council tax premium cut funded by tourism levy
Bruce Sinclair
A second home-owner has called for the council tax premium paid on such properties to be cut, with the lost revenue potentially replaced by money raised through a future tourism tax.
The proposal has been put forward in Pembrokeshire, where second home-owners currently pay a council tax premium of 125% above the standard rate.
The homeowner, who wished to remain anonymous, has written to the leaders of all political groups on Pembrokeshire County Council as well as senior councillors, including cabinet member for finance and former council leader Cllr Jon Harvey.
He said he supported the principle of charging a second homes premium but argued the current level was “not equitable”.
He has called for it to be reduced to a maximum of 100% in the short term, with a longer-term target of 50%, and suggested revenue from a visitor levy could help make up the difference.
Pembrokeshire County Council previously announced it would not introduce the levy during the current administration, which runs until the 2027 local government elections.
Under legislation introduced in Wales, individual councils can decide whether to impose a levy on overnight visitors.
The charge would be 75p per person per night for stays in hostels and on campsites and £1.30 for other accommodation including hotels, B&Bs and self-catering properties.
The second home-owner argued that even a 75p levy could raise enough money to allow the second homes premium to be reduced immediately to 100%.
He rejected arguments that a levy would create an excessive administrative burden for accommodation businesses or significantly deter visitors.
He said: “The reality is that there is a credible literature on the formal relation between price and demand which is summarised in ‘Evidence review of elasticities relevant to a visitor levy in Wales’ (2022).
“In general, the findings suggest that accommodation tends to be less sensitive to price increases than other tourist expenditure.”
He also pointed to estimates that Pembrokeshire recorded between nine and 10 million visitor nights in 2024.
He said: “Thus, a notional Tourist Tax of (say) £1 per person per night would produce a total of more than £9 million for the year.”
However, the actual Welsh visitor levy rates differ from his hypothetical £1 charge and the amount raised would depend on factors including the number and type of chargeable overnight stays.
Opponents of visitor levies have argued that additional charges could discourage price-conscious tourists or encourage them to choose destinations where no levy is imposed.
Decision
Responding to the proposal, Cllr Harvey said decisions on both the second homes premium and any future visitor levy would have to be taken by the full council.
He said: “Last year full council resolved to reduce the second homes premium from 150 to 125% for the financial year 2026-27.
“As this is decided on an annual basis it will again come before full council later this year.
“With regard to a Visitor Levy, I don’t envisage an introduction during this administration. Post the 2027 [local government] elections it will be a matter for any new administration to consider.”
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As a second homeowner, I supported the council tax premium on the basis it would be used to support affordable housing. Now we’re in a situation where 92% is being put into the general coffers. So either use the money for its intended purpose or reduce the second home premium still further.
Councils who can’t demonstrate they’ve used this money to seriously tackle affordability will need to explain that to voters next May.
Opnions vary, but there are a large number of us who are aghast at those who are able to afford two homes pleading poverty in order to get the counciul tax on their second home in an area where many locals can’t afford a first home, largely due to the high numers of those with second homes in the area, the market for which has completely distorted the local housing market thus preventing locals from even gettng a foot on the housing ladder. The person requesitng the reduction should thank their stars that Pembrokeshire’s levy is only 125% rather than… Read more »
So the proposal is to take revenues ringfenced to develop the visitor economy and use them to increase homelessness.