Opinion

At a stroke, the Welsh Government could go a long way to solving the second homes crisis – here’s how

07 Jun 2021 3 minutes Read
Abersoch, which is popular with second home owners. Picture by Ken Doerr (CC BY 2.0)

Dafydd Meurig, Deputy Leader of Gwynedd Council

While still dealing with the pandemic, Mark Drakeford must have had a peek at other items in his inbox and will be considering his priorities for the term ahead.

One of the most urgent of these must surely be dealing with the housing crisis that is strangling rural coastal communities, as any further delay will result in the demise of dozens or even hundreds of small towns and villages.

The First Minister is not short of advice on how to deal with the problem. Cyngor Gwynedd have made six practical recommendations as a result of a substantial report it commissioned last year. Dr. Simon Brooks has made 12 recommendations in a slightly later and very similar Welsh Government-commissioned report.

Plaid Cymru have also published a 5-point plan, and Cyngor Tref Nefyn have eloquently described the dire situation in their own community, which is mirrored in many more.

Although there is no single bullet as Mark Drakeford himself has said, all these ideas boil down to three fundamental approaches: taxation, licensing, and planning, and they all need to be tackled.

The licensing approach will likely take a couple of years to design and put into practice, and I’m well aware of the glacial pace of change in any planning policy. However, our communities do not have the luxury of waiting for these to come into force.

Answer

Fortunately, there is a taxation solution which comes as close to a silver bullet as we can get. And it can be done relatively quickly and easily – if the will is there it could be in place by the next financial year.

A minor amendment needs to be made to Section 66 of the Local Government Finance Act so that any dwelling house is defined as a dwelling house for tax purposes and thus has to pay Council Tax and any premium as appropriate – regardless of whether or not it is used as a second home or holiday let.

This simple change will close the so-called loophole which allows second homes to benefit from the Small Business Rate Relief scheme and hence pay zero taxes.

At a stroke, this will be a very strong deterrent to any house being bought as a second home, while at the same time raising millions of pounds for affected local authorities to provide affordable homes for local people.

In Gwynedd, this would mean being able to be bolder and move much faster with our already ambitious Housing Action Plan.

So my simple plea to the First Minister: Mr Drakeford, please ask your officials to call Cyngor Gwynedd – we’ve done the homework, we have the answers.

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Mab Meirion
Mab Meirion
15 days ago

Sounds good to me, simple and watertight.

Royston Jones
15 days ago

Closing the loophole would be a start, but most of the holiday homes I know are used as holiday homes, and would therefore not be affected.

In my village the bigger problem for locals is people buying homes to live in permanently. People who’ve bought a local business, or are taking a local job, or else just retiring. What’s Cymgor Gwynedd’s solution for this?

Though it’s nice to see my local council waking up to the problem after waiting so long to introduce the 100% surcharge on holiday homes. What was the reason for that?

hdavies15
hdavies15
15 days ago
Reply to  Royston Jones

Agreed that the response to this crisis has been very slow in taking shape at least there are now some people working within local government prepared to apply levies/taxes and, most pertinently, act to close loopholes. A wholesale closing of all scope for wide boys from anywhere ( some are from within Wales) to cheat the system while wrecking the market for our native families is needed as a matter of urgency.

Smith
Smith
15 days ago
Reply to  Royston Jones

Considering mark has two second homes himself, how extensive will this be?

Stephen Owen
Stephen Owen
15 days ago

Mark Drakeford and the Welsh Government please do something before it is too late.

Padi Phillips
Padi Phillips
15 days ago

Sounds like a plan, and whilst the last thing that is needed is a rush job, I think that as far as Council Tax is concerned, the premium needs to be increased to a mandatory 200% for those homes used as a second home or holiday let. Such an increase would not only serve to deter people from considering the purchase of a holiday home, but more than likely ensure that many such properties come onto the market, thus depressing house prices locally and thus allowing local people searching for a home the chance of having one at a price… Read more »

hdavies15
hdavies15
15 days ago
Reply to  Padi Phillips

That last paragraph sums up the real root cause of so many of the other structural failings of coastal and rural Wales. Over reliance on Tourism is a curse just like over reliance on anything else is no long term remedy

Mandi A
Mandi A
15 days ago
Reply to  Padi Phillips

The same Cyngor Gwynedd which was contemplating giving planning permission to turn a social club in the middle of Caernarfon into holiday flats (as featured a few weeks ago on this site). I still fail to understand how charging higher taxes deters second homes. It just makes them only available to the select people who have plenty of money. And then the old chestnut of putting the money into “affordable homes for local people”, little boxy new builds on the sites of closed down schools, next to railway lines and other places unattractive to people looking for R&R. In the… Read more »

Mandi A
Mandi A
15 days ago
Reply to  Mandi A

And what to do for the lucky people who inherit a place in Wales but don’t have the extra readies to pay the council tax and end up selling creating yet another buy-to-let? Some stories like this in Daily Post recently.

Wrexhamian
Wrexhamian
14 days ago
Reply to  Mandi A

The big hike in council tax is only being proposed for holiday homes, though, and not for homes that are going to be actually lived in by local home-buyers. Such a person would only start paying the proposed higher charge if they succeeded in turning the house into a holiday home.

Smith
Smith
15 days ago

I’d prefer drakey to address the housing crisis in south east wales as well. I’m priced out of being able to afford a home

hdavies15
hdavies15
15 days ago
Reply to  Smith

… and a major factor in driving prices through a “domino effect” is the number of people relocating across the Severn to buy up cheaper homes on the Gwent side. This was becoming an issue since the ending of tolls ( unforeseen, unintended consequence) and further boosted by Bristol office types now switching to home working with much less time at offices.

Smith
Smith
15 days ago
Reply to  hdavies15

Well if that’s going to happen then so be it. Mass immigration from outside of the UK ring any bells ?

hdavies15
hdavies15
14 days ago
Reply to  Smith

Are you suggesting that most of the influx into Gwent has come from beyond Calais, with only a brief pit stop in Bristol en route ? No evidence of that. Anyway people from beyond Calais are welcome as long as their aspiration is to settle into Wales rather than fit the Little Englander model.

Smith
Smith
14 days ago
Reply to  hdavies15

Erm, no….

I’m talking about the net legal migration of 300,000 people per year into the United Kingdom from overseas which has caused UK house prices to rise generally and broadly.

And sure. I’m all for supporting refugees in desperate need.

Wrexhamian
Wrexhamian
14 days ago
Reply to  Smith

This article is specifically about Welsh-speaking communities in Wales, and how to tackle the problem of holiday homes.

David Roberts
David Roberts
7 days ago

The answer is to provide more affordable homes. Farmland cost £7,000 per acre Building land costs £1m per acre. The council should buy farmland on the perimeter of villages at £7,000 per acre then rezone it for housing. They should then build starter homes at the rate of 10 per acre giving a land cost of £700 /plot Then build typically build 400 sqft 2 bed starter flats for £50,000 for sale and rent to locals only. This problem is not confined to Wales, All over the UK young couples cannot afford a home because of the underlying cost of… Read more »

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