Second Welsh council considers moves to ease holiday let tax bills
A second Welsh council is set to ease council tax premiums on some self-catering properties amid concerns about mounting financial pressures on holiday let operators.
Powys County Council has backed plans to introduce a discretionary discount removing the premium element from backdated council tax bills, following similar concerns raised by Cyngor Gwynedd.
The proposal, agreed by Powys cabinet last month, will go before full council in May.
If approved, it would apply retrospectively to April 2023 and could result in substantial refunds for some businesses.
The move comes as pressure grows over the Welsh Government’s “182-day rule”, which requires self-catering properties to be let for at least 182 nights a year to qualify for business rates.
Properties that fall short are moved to council tax and can face second-home premiums of up to 300%.
The threshold is significantly higher than in England and Scotland, where properties need to be let for just 70 nights, raising concerns about competitiveness and the viability of some rural tourism businesses.
Welsh Government guidance allows councils to use discretion when applying council tax premiums, particularly where there is evidence of economic impact or hardship.
If implemented, Powys would become the first authority to remove premium charges from backdated bills while retaining the standard rate of council tax.
Figures suggest the policy is already having an effect. Around 40% of self-catering properties in Wales have failed to meet the threshold, while Powys has seen a 28% fall in properties listed for business rates since April 2023.
Similar trends have been seen in north Wales, where numbers of holiday lets registered for business rates have dropped sharply in recent years.
‘Struggling’
Gwion Llwyd, who runs Dioni Holiday Cottages and leads the Let’s Review 182 campaign, said: “What we’re seeing now is local authorities starting to respond to how this policy is working in practice.
“Many small businesses are struggling to meet the threshold not because they’re doing anything wrong, but because of the way the market operates, particularly in rural areas.
“Operators are facing bills they simply can’t afford, and we’re starting to see increasing numbers stepping back or closing altogether. That has real consequences for rural communities that depend on tourism.”
A spokesperson for Cyngor Gwynedd said the council had already made representations to the Welsh Government calling for the threshold to be reviewed and reduced.
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More fiddling around the edges. Cancel the 182 day criteria and be brave and say what this rule was all about. Firstly deflection. It allowed the Welsh Government to deflect from its own failures in regards to housing and blame it on other people. Nation Cymru needs to ask, is there any evidence that the second/holiday homes that have been sold are being sold to locals? Secondly a tax grab. Councils are always on the hunt for more money. They got greedy and saw this as an opportunity to milk certain homeowners. The problem (and they should have realised this)… Read more »
I agree, the second/holiday home tax is merely a smoke screen covering the housing issues that haven’t been addressed by local authorities and opportunistic tax revenue raising because of years of Tory austerity. Great point made by Swn Y Mor too – who are buying the houses? Are they locals? Or are they retirees from other places in the UK? Local authorities and groups such as Nid yw Cymru ar Werth should be campaigning for better paid jobs in Welsh communities so locals wouldn’t move out and they’d have a better chance to buy houses locally. The second/holiday home tax… Read more »
There should be a premium on second homes. But it should be reasonable and proportionate. I think Cyngor Gwynedd are a damn sight better informed than those in Cardiff.
As someone that is in favour of curbing second homes in a country that is suffering home shortages. The way they went about it with a sudden punitive measure was wrong and incompetent and only serves to destabilise the market and as an ego trip to whatever politicians that introduced it.
What you and Swn y Mor seem to fail to recognise that it is overtourism that is destroying ‘viable family oriented, sustainable communities with good, stable employment opportunties’. Tourism isn’t actually necessarlily a bad thing, but it needs to be directly under the control of the community, and geared to derive maximum economic benefit for the community and not be be a source of rent extraction for investors. In short, tourism should be the icing on the cake, and not what it too often currently is, the bread and butter, and in very meagre amounts at that. Yes, the economy… Read more »
‘Derive maximum economic benefit for the community’. Wouldn’t you say there is already a very large economic benefit? Second homes pay more council tax. Holiday accommodation pay business rates and if they are unfortunate a council tax premium up to 300%. Tourists spend money in local businesses. Tradespeople repair and maintain holiday homes. Catering companies supply businesses etc. One post on Facebook mentioned how a local gas supplier in Anglesey had lost over double digit customers as people sell up their holiday homes.
The move was mostly driven by plaid, especially rhun and mabon – who strongly supported this. I don’t think labour thought much of this until coop agreement. But if you cast you mind back, there was houses being sold off right and centre just after Covid for holiday homes, prices were rapidly rising. The move calmed market down, for sure. My point is it was well intentioned initially and done for a good reason. Like anything, there can be unintended consequences and should always be reviewed
Homes that are sitting empty most of the time in a housing crisis are absolutely fair game. Remember none of this would be happening without Thatcher’s fire sale of council homes and the subsequent ban on replacing them.