Second homes and empty properties subject to Gwynedd’s council tax premium declining

Dale Spridgeon, local democracy reporter

Gwynedd has seen a sharp drop in the number of second homes and long term empty properties subject to the county’s council tax premium over the past year.

Council research revealed there were more than 500 fewer second homes in the county subject to the tax in November 2023, compared with November 2022.

Although the number of properties appeared to have dropped, there was “not enough evidence to say it was due to the effect of the premium itself”, cabinet member for finance Cllr Ioan Thomas told the full meeting of the council on Thursday.

And the council’s head of finance Dewi Owen reported they had seen more properties “transitioning” from being subject to council tax to becoming self-catering holiday units.

He said they were “more often than not avoiding tax as they receive the tax relief of small businesses” when changed.

A decision was made at the meeting to make no changes to the Council Tax Premium arrangements for the financial year 2024/25.

The council formally agreed to continue to keep the premium at 150% for second homes, and 100% for long-term vacant houses.

Holiday lets

Cllr Thomas said the council was trying to identify the reasons for the decline in second home numbers.

Mr Owen also described how more properties had moved back into the council tax system in 2023, compared with 2022.

Increasing thresholds for transfer to business rates, which had become effective on April 1 , was “certainly likely to have had an impact on this,” he said.

But he added: “If holiday properties are coming back into the council tax system, why is the number of second homes falling too?

“Are these properties being sold or let as main homes, in line with the intention of Cyngor Gwynedd and Welsh Government policy, or is something else going on?

“That is what the research, which has identified different patterns in different periods, is trying to establish.”

Primary residences

Pre-pandemic the number of second homes for the purpose of taxation was “falling steadily” in areas with a very high and significant proportion of second homes, but increasing in areas with lower numbers, he noted.

“The majority of the reductions in the popular areas was a direct result of the transfer of the business tax system, such as changes to holiday accommodation and self-catering units, pre pandemic,” he said.

Towards June to November 2020 the picture again “changed significantly” with the number of second homes increasing.

He said: “It would have been higher had some houses not continued to transfer to business tax.”

A “significant number” of houses also changed from primary residences to second homes in this period, he said.

“For the two year thereafter, from November 2020 to November 2022 we returned to the previous pattern of declining numbers of second homes,” he said.

“What has been noted by the research team is that only 37 percent of these were net transfers to the business tax systems as holiday accommodation, this was a lower percentage than before the pandemic.”

‘Normal houses’

In the 2020 – 2022 period, more second homes had also become “normal houses” in terms of their tax treatment as primary residences.

Patterns since December 2022 were “different again” with a reduction in second homes and self-catering holiday units in “area groups” with higher numbers of second homes.

“A tightening of rules changed the picture,” he said.

“Five hundred houses ceased to be second homes from the tax perspective, and have at least appeared to come back as a main or primary residence since December 2022.”

But ongoing work was being carried out to make sure that changes to a status of a property was accurately reported to the council, with work to verify that undertaken by the tax service, independent of the information unit.

He said: “What we need to know is if changes of use are associated with house sales at the same time, or change of use by the same owners moving in.”

Full data for 2023 would not be available yet, and he concluded: “Although, a pattern is starting to to appear, we can’t say for certain if changes are directly due to the premium, work is ongoing.

“In terms of the decision made today, there’s no evidence to hand which justifies changing the rate of the council tax premium at this time.”