Welsh government facing criticism over second home tax that could turn tourist hotspots into ‘ghost towns’

The Welsh Government is facing criticism over its scheme to charge second-home owners a council tax premium of up to 300%, with some warning it could turn tourist hotspots into “ghost towns”.

In April 2023 the amount councils in Wales could charge second-home owners rose to 300%, in a bid to free up housing stock for locals.

In addition, the number of nights holiday let owners must fill their properties to avoid the second home tax and be eligible for business rates rose from 70 to 182.

But holiday accommodation providers say the new threshold is pushing many out of business.

“We’ve got examples who are already realising that this is going to be a really hard target for them to achieve,” says Gwion Llwyd, who represents around 200 holiday let owners in Wales.

He says some are already selling up.

“They’re just going to give up and going to come out of the market unfortunately,” he added.

“They’re going to take the kitchen out, rip the bathroom out so it doesn’t class as accommodation anymore, and give up on the business. So that barn will sit empty now and contribute nothing to the local economy.”

In part, holiday properties being sold because of the increased premium demonstrates the government’s plan is working.

But in the seaside resort of Abersoch, Gwynedd, the policy is causing anger.

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The area charges a 150% second home council tax premium, the highest rate in Wales.

For decades a playground for wealthy outsiders, more than 54% of properties in the village are either second homes or holiday lets, with most locals priced out.

The village is home to the most expensive street in Wales – where clifftop houses average more than £1.7m. On the beach below, a small boat shed is currently on the market for offers in excess of £250,000.

Nigel Jones runs a local shop and told Sky News the government’s council tax premium won’t do anything to increase affordable housing and only hit the local economy.

“They’re actually probably killing the market to be honest,” he said.

“It won’t do anyone any favours, it’ll just become a ghost town because the houses are so expensive here. I don’t think any local will ever be able to afford it. What Gwynedd [council] should do is build more houses for locals rather than tax the second homes so much.”

At the heart of the policy are local people unable to find somewhere affordable to live.

Angharad Owen, from Anglesey, was forced to stay in a friend’s converted shed, before finally finding a property to rent in the small village of Brynrefail, near Snowdon.

She told Sky News that since the COVID-19 pandemic, the area has changed.

“There were a lot of people coming here wanting to buy a piece of paradise,” she said.

“I have seen a number of houses up for sale and snapped up very quickly – and I’ve been looking myself because I’d like to buy a place but the prices have been going up scarily.”

She says it is mainly Airbnbs popping up.

“I’ve had neighbours who I’ve got to know and then they’ve left and the properties have changed into Airbnbs,” she added.

“I’ve seen a lot of change in a very short amount of time. It changes the whole dynamic, you lose that sense of community.”

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Reacting to concerns from holiday let owners, Rebecca Evans, the Welsh Government’s minister for finance and local government, told Sky News: “We think that for a business to benefit from small business rates relief it really should be operating as a business for half of the year.

“We do know some property owners may find that particularly difficult, so we have provided local authorities with the discretion to either not apply the premium or reduce council tax to nothing in cases where they think that’s the right thing to do.”

Ms Evans admitted the second home premium is not the complete solution to solving the housing crisis.

“It’s definitely the case that some of these properties are not going to be affordable for first time buyers or local families necessarily – that’s why it’s really important we have a much wider approach,” she said.

“Premiums on council tax aren’t going to solve all of our housing issues here in Wales, but what we are doing is investing tens of millions of pounds in purchasing empty homes for example, putting those up to standard and a whole range of other interventions as well.”

Elsewhere, Scotland is continuing to consult on plans to charge double council tax, while in England some councils, such as Cornwall, are planning a similar measure.