With Holiday lets being incredibly popular in UK holiday destinations like Wales and most notably Cornwall, the government risk losing out on council tax for the area. Currently, second home owners can avoid council tax by registering their properties as a business such as Holiday Lets, as long as those properties are let for 70 days per year.
In April 2023 Welsh councils will increase the second home premium to 300%. This will make it harder for Holiday Let properties to be eligible for business rates instead of council tax, meaning some holiday let owners face losing their livelihoods.
This new rule that’ll come into place has already lead to one large company abandoning plans to build 10 luxury units and will now spend the money in England instead.
The company based in the Brecon Beacons, currently has 20 self-catering units but its booking agents cannot guarantee the attraction will meet the new letting requirements. Its chairman, Ashford Price, warned of the “serious economic damage” caused by Welsh Government proposals that would give tourism sectors in England and Scotland a huge competitive edge.
In 2021 more than 150 campaigners joined together in Newport, Prembrokeshire to demand action by the Welsh government as Rural areas face a housing crisis due to Holiday Let ownership in Wales. They say the price of a three-bedroom house in the town is now more than £400,000, while the average property price across the county is claimed to be £227,000.
Since then The Welsh government has been under pressure to act, and plans to introduce the new legislation in April 2023.
Currently, to be eligible for business rates the Holiday Let needs to be made available for at least 140 days. However, the property can be let for 70+ days and will still be able to pay business rates rather than council tax. Under the plans from 1 April 2023 the threshold will rise, so properties will need to be made available for at least 252 days, and actually let for 182.
Finance Minister for Wales, Rebecca Evans said: "The purpose of the change is to help ensure property owners are making a fair contribution to local communities, for example by increasing their contribution to the local economy through greater letting activity or by paying council tax on their properties."
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.
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