News

Second home tax hike splits opinion in public consultation

10 Feb 2021 4 minutes Read
The coastal village of Aberdyfi, Gwynedd. Picture by Llywelyn2000 (CC BY-SA 3.0)

Gareth Williams, local democracy reporter

Views on plans to increase a holiday home tax premium has largely split opinion between those that own second homes and those who do not, a new report has revealed.

A recent consultation on Gwynedd Council’s  proposals to double the 50 per cent premium currently charged on second home owners saw over 6,227 responses, with 55.1 per cent indicating that such properties were having a ‘positive’ impact on local communities.

But with 3,650, or 58.6 per cent, of the respondents themselves owning second homes in the county, the majority of those who don’t were clear in their view that such properties are having a negative effect.

Having attracted the biggest response to a council consultation in several years, the views expressed will be considered when the Cabinet meets on Tuesday (February 16) to discuss its recommendation to full council.

Since 2018 a 50 per cent premium has been slapped on the council tax bills of owners of second homes in Gwynedd – which has more holiday homes than any other area of Wales –  with some of the extra cash earmarked to help young people by building and bringing empty properties back into use.

But despite fears over the sheer scale of second home owners exploiting a “loophole” meaning they not only avoid paying the premium but any council tax at all, Gwynedd has been exploring doubling the premium to 100 per cent – the maximum permitted under current law.

The cabinet report notes that of Gwynedd’s 61,645 households, 4,873 are designated as second homes and another 1,976 as self-catering holiday units, making up a combined 10.76 per cent of the entire housing stock.

It added: “It is not surprising to understand that the taxpayers who currently pay a premium do not feel that it is appropriate to ask them to pay more, but 61.2 per cent of those who said that they were not currently subject to the premium were supportive of the intention.

“This is the best suggestion that we have that the view among those who do not pay the premium – and who have responded to the consultation – is divided.”

It went on to note that a common argument from second home owners was of the economic benefit they brought to Gwynedd, including providing work for builders, traders and supporting local shops.

It also addressed concerns that hiking the premium could incentivise more second home owners to designate their property as non-domestic rate paying self-catering holiday units, with 2,106 having already done so since 2014.

‘Loss’ 

Said to average at 400 a year, such annual transfers represent a loss of £286,000 of tax premium income every year, not including the basic council tax which will also be lost and a refund paid due to back-dating.

“Second home owners who currently pay a premium were also aware that those who have transferred their properties to self-catering holiday units avoid paying any taxes at all,” concluded the report, but others who had inherited or owned their for property for several years said they had “no desire” to start letting it commercially and, if anything, were more likely to dispose of the property.

“In considering its recommendation, Cabinet will be aware that increasing the premium is likely to increase the income received by the council and this product could be used to fund more projects in the Housing Action Plan.

“It is also a tool for tackling social injustice within Gwynedd.

“On the other hand the income is not guaranteed should dwellings continue to transfer to self-catering holiday units, and adjusting the premium is not going to be a solution to this ongoing problem.”

Also to be discussed by the cabinet will be proposals to borrow £15.4m to buy around 100 houses to let out to locals for an affordable rent.

The move, which includes snapping up properties from the open market, is in response to a 2,700 strong housing waiting list, and forms part of the recently adopted housing action plan – partially in answer to the county’s growing second home issue and soaring house prices.

Cllr Craig ab Iago, the cabinet member for housing, said: “The scheme will involve significant investment, and the business case we are proposing shows that the investment will be repaid over a number of years.

“It will be a major step towards our goal of ensuring that the people of Gwynedd have access to a suitable, quality, affordable home that enhances their quality of life.”

Both items will be discussed by the Cabinet when it meets virtually on Tuesday, February 16.

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