Second home buyers hit with 300% tax rise in part of UK

The Welsh Government has announced an increase to the maximum level of council tax premiums for second homes, as well as new local tax rules for holiday lets. 

The move is a pre-condition of a political agreement between the Labour-led Welsh Government and the Welsh nationalist party, Plaid Cymru. 

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 per cent, 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 per cent and were paid on more than 23,000 properties in Wales in the past year. 

The Welsh Government is urging councils to use revenue raised from the premiums 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.

A statement from the Welsh Government says that 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.

Rebecca Evans, Wales’ minister for finance and local government, says: “These 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. 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 £1 billion of funding to build 20,000 low carbon social homes, contained in the budget I published at the end of last year.”

Last summer the Welsh Government outlined a three-pronged approach to address the impact of second home ownership faced by Welsh communities. 

Julie James, the minister for climate change and the architect of the approach, says: “We want people to be able to live and work in their local communities. But we know rising house prices are putting them out of reach of many people, exacerbated by the cost-of-living crisis we are facing.

“There is no easy answer or quick fix solution. This is a complex problem that requires a wide range of actions. We continue to carefully consider further measures that could be introduced, and these changes are the latest steps we are taking to increase the availability of homes and ensure a fair contribution is made.”