Second home owners in Wales could face a massive 300% rise in council tax

Second home owners in Wales could face a massive 300% rise in council tax under new plans unveiled by the Welsh Government.

The package of measures has today been announced today to help tackle the housing crisis.

They include an increase to the maximum level of council tax premiums for second homes, as well as new local tax rules for holiday lets.

The measures are part of a wider commitment to address the issue of second homes and unaffordable housing facing many communities in Wales, as set out in the Co-operation Agreement between the Welsh Government and Plaid Cymru.

It is hoped the move to tackle second home owners will help to ensure people can find an affordable home in the place they have grown up.

As part of the plans the maximum level at which local authorities can set council tax premiums on second homes and long-term empty properties will be increased to 300%, which will be effective from April 2023.

Councils will be able to set the premium at any level up to the maximum, and they will be able to apply different premiums to second homes and long-term empty dwellings.

Premiums are currently set at a maximum level of 100% and were paid on more than 23,000 properties in Wales this year. Local authorities opting to apply premiums have access to additional funding, and the Welsh Government has encouraged councils to use these resources to improve the supply of affordable housing.

The criteria for self-catering accommodation being liable for business rates instead of council tax will also change from next April.

Currently, properties that are available to let for at least 140 days, and that are actually let for at least 70 days, will pay rates rather than council tax. The change will increase these thresholds to being available to let for at least 252 days and actually let for at least 182 days in any 12-month period.

The change is intended to provide a clearer demonstration that the properties concerned are being let regularly as part of genuine holiday accommodation businesses making a substantial contribution to the local economy.

Both changes follow a consultation processes including businesses, the tourism industry and local communities.

Rebecca Evans, Minister for Finance and Local Government, said the changes will “give more flexibility to local authorities and provide more support to local communities in addressing the negative impacts that second homes and long-term empty properties can have.”

She continued: “They are some of the levers we have available to us as we seek to create a fairer system.

“We will continue to make every effort to increase the supply and availability of houses, as shown by the £1bn of funding to build 20,000 low carbon social homes, contained in the budget I published at the end of last year.”

Designated Member Sian Gwenllian MS added: “It is clear that we as a country are facing a housing crisis. So many people cannot afford to live in their local areas, and the situation has worsened during the pandemic.

“These changes will make a difference, enabling councils to respond to their local circumstances, and start to close the loophole in the current law.

“It’s a first, but important, step on a journey towards a new housing system that ensures that people have the right to live in their community.

“Through the Co-operation Agreement, we are committed to introducing a package of measures to tackle the injustices in the housing market. Today’s announcement is just one part of that wider package.

“Second homes are a symptom of a wider problem – a market that treats property, not as a home, but as a way of making a profit.

“By working across the parties in the Senedd, we will introduce more measures, as soon as we can, to make house prices and rents genuinely affordable for people.”

However the measures have been condemned by the Welsh Conservatives who have blamed the housing crisis at ministers.

Welsh Conservative and Shadow Minister for Housing, Janet Finch-Saunders MS said: “It is deeply concerning that Labour ministers are pandering to their nationalist coalition partners and punishing aspiration and investment in Wales.

“The housing crisis is a direct result of years successive Labour-led governments failing to provide opportunities and build enough houses with housebuilding falling below levels before devolution. What we see is a Labour Government desperately trying to act long after the horse has bolted.

“This Labour Government is failing to tackle the root issues of the housing crisis failing to address the fact that, until recently there have been more empty homes in Wales than there are second homes.

“Labour ministers in Cardiff Bay need to get a grip, address the housing shortage in Wales and provide an environment where hard work can be rewarded.”