Welsh Gov insists second home owners aren’t ‘gaming the system’

The Welsh Government has insisted that second home owners are not “gaming the system”.

Julie James MS, Minister for Housing and Local Government, defended the governments approach to the issue of second homes in a written statement.

According to recent figures, in Gwynedd, an area where many people are already priced out of their own communities, the price of detached homes increased from an average £250,000 in the previous quarter to £280,000.

It is the area with the highest increase in average house prices, which shot up by 14.6 per cent in just three months.

Sian Gwenllian, Plaid Cymru MS for Arfon, has previously called on the Welsh Government to close a “loophole” that allows a “great number of second-home owners can avoid paying taxes.”

According to Ms Gwenllian, by registering their second-homes as small businesses, “these owners can not only avoid having to pay council tax but they also receive full business rate relief.”

‘Gaming the system’

Julie James MS, Minister for Housing and Local Government, said: “We are aware of claims that some owners are gaming the system, with a suggestion that they have had their properties listed as non-domestic, self-catering accommodation to avoid liability for council tax premiums.

“The available evidence indicates that properties listed as self-catering accommodation meet the required legal criteria and are being used as short-term lets.

“We have invited local authorities to identify any cases where they believe properties do not meet the criteria so that they can be re-examined: that invitation still stands.”

She added: “This Government is clear that everyone should have a decent home, an aim that has been brought into sharp focus during the pandemic.

“Our long-standing commitment to increasing the supply of affordable homes has been matched by our record investment and reflected in the 20,000 affordable homes that will have been built this term.

“We are, however, acutely aware of growing concern in some parts of Wales about the impact of second homes on communities, access to housing and affordability and the impact this has on the Welsh language.

“Whilst not a pan-Wales issue, it is one that is affecting communities and provokes strong feeling at local or hyper-local levels.

“The Welsh Government has already taken decisive action – providing local authorities with the significant flexibility to use a number of different Welsh Government schemes, including Social Housing Grant (SHG), to help address their local housing needs.

“Indeed, we have pre-empted and responded to the current situation in a number of ways.

“Through taxation and ensuring a fair contribution. We are the only UK administration which has enabled council tax premiums to be levied on second homes.

“Local authorities in Wales have been able to use these discretionary powers to levy higher rates of council tax on second homes – and long-term empty properties – since 2017.

“The discretionary nature of the powers reflects the highly localised challenges and I welcome the creative use by some local authorities of these powers to stimulate the better use of the dwelling stock in their areas and utilise the additional funding to underpin housing plans and the development of affordable housing.

“Eight councils are currently charging premiums on second homes, and from the next financial year one will levy the full 100% currently available.

“Other administrations, in other parts of the UK, chose to extend the temporary relief introduced for the main residential rates in July to purchases of additional properties, including second homes.  We did not do this in Wales.

“We increased by one percentage point the higher rate of Land Transaction Tax which applies to the purchase of additional properties, including second homes.

“Crucially, the additional tax receipts generated by this change will be invested to support public services, in particular the development of more social housing.”

‘Finally recognising’ 

A Plaid Cymru spokesperson said: “The fact that the Welsh Government is finally recognising the second homes crisis and its devastating impact on the sustainability of our communities and the Welsh language is to be welcomed.

“Understanding that the Government is actively educating itself on the problem by carrying out further research into the situation and collecting more data will, however, provide little comfort to those across Wales who cannot afford to buy houses in communities that are on their knees.

“They fully understand the devastating impact of excess second homes on the ground and it is right that everyone look to the Welsh Government to do something about it.

“”Plaid Cymru’s councils are doing the best they can within the powers currently available to them. Gwynedd Council has used the additional funding from the second home premium to build social housing for local people.

“Plaid Cymru nationally has published an action plan with a series of measures that could be implemented immediately across all areas of government responsibility.

“This includes changing planning use classes to require planning permission before converting a dwelling into a second home, doubling the second home premium again and closing the loopholes that allow some to pay ‘ the same penny of tax on some second homes, and making housing accessible to local people.

“We disagree with the government that it there is not one question to solve here. It’s basically a simple question and one for the whole of Wales: how can some people afford several houses while others can’t afford one? Any Labour government should understand that.

“This announcement today is too little, too late just three months before an election. Change of government is now the only solution to the second homes crisis and Plaid Cymru has a plan in place at the ready.”