Speaking in a debate on Second Homes in the Welsh Parliament this afternoon, North Wales Assembly Member Mark Isherwood relayed concerns expressed by a North Wales Council that Welsh Government legislation on second homes “is costing tax payers millions” and called for the issue to be addressed.
In the Opposition debate, Mr Isherwood referred to his questioning of a representative from Gwynedd Council in Committee, who told him that “the transfer of domestic council tax properties into business premises in Gwynedd is significant” and that “about 98 per cent in Gwynedd have small business rates relief. . so, the loss to the public purse in the tax take is in the millions”.
Mr Isherwood stated that “working with the Valuation Office, the Welsh Government must therefore give attention to this perhaps inevitable consequence of its legislation”.
However, he also stressed that they must not penalise either the contribution made by self-catering businesses to the tourism economy - or second home owners forced to generate extra income on affordability grounds but who are playing by the rules.
Speaking in the Chamber he said:
“During the Second and Third Assemblies, widespread concern about the impact on Tourism Businesses of then Welsh Assembly Government proposals to change the qualifying criteria for self-catering accommodation was expressed by trade bodies, including the Wales Association of Self Catering Operators and Welsh Tourism Alliance Members.
“Further to this, Welsh Government legislation recognised that some dwellings could be used either as second homes or as commercially let self-catering holiday accommodation.
“The Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2010 stated that to qualify as self-catering accommodation, a dwelling must be available to let for at least 140 days in a 12-month period and actually let for at least 70 days.
“The Order was revised and strengthened in 2016. The qualification periods were retained, reflecting the public consultation responses.
“Even within this criteria, I have been asked by farming families from Flintshire to Anglesey, investing to diversify their businesses, to represent their concerns that the 70 day occupancy rule is too long and inflexible for a short holiday season - especially for a new-start self-catering business.”
He added:
“The Housing Act (Wales) 2014 added discretionary powers for local authorities to apply premiums of up to 100% to the council tax bills for long-term empty properties and second homes – where authorities can set the premium at any level up to 100% for either or both. The decision to apply a premium is a matter for individual local authorities. Gwynedd, with almost 5,000 second homes, introduced a 50% premium on Second Homes – as, oddly, did Flintshire. Conwy introduced a 25% premium.
“However, Gwynedd warned that ‘many of these properties would be subject to attempts to avoid the additional tax if Second Home Owners decided to let out to customers for more than 70 days a year’.
“Responding to me in Committee, Gwynedd Council’s representative stated “I know that this idea that a lot of our empty properties are owned by people from out with Gwynedd isn't necessarily, isn't complete, because many people within Gwynedd own these vacant homes, as you say, because they've inherited property and they want to do something with it”.
“When I said to him ‘Some second homeowners are very, very wealthy, some less so’ and asked ‘to what extent is the circumstance you're describing genuine, where somebody might actually be letting the property for more than the eligible period during the year for affordability reasons? And to what extent is it trying to bypass the cost?’, he replied ‘the transfer of domestic council tax properties into business premises in Gwynedd is significant. We're talking over 1,000 at the moment that have transferred. We're talking about hundreds every year. And what they need to do is to assure the Valuation Office that the property has been available for 140 days and has been let for 70 days, and they can then transfer it’.
“He added that ‘about 98 per cent (of these) in Gwynedd have small business rates relief. . So, the loss to the public purse in the tax take is in the millions”.
