The Welsh Government’s decision to introduce the legislation was borne out of their consultation on Local taxes for second homes and self-catering accommodation, which is part of their three-pronged approach to address issues of affordability and the impact large numbers of second homes and holiday lets can have on communities and the Welsh language.
Short-term lets
The length of time a property is required to be let is increasing from 70 days to 182 days for the purposes of Non-Domestic Rates eligibility. Regulations (The Non-Domestic Rating (Amendment of Definition of Domestic Property) (Wales) Order 2022) will also amend the length of time a property is required to be available to let, increasing it from 140 days to 252 days.
The aim of increasing the thresholds is to provide a clearer demonstration that the properties concerned are being let regularly as part of genuine holiday accommodation businesses and are making a substantial contribution to the local economy.
The Order will come into force as soon as possible during the Spring and will have practical effect from 1 April 2023, applying the amended criteria from that day onwards.
A consultation on the draft statutory instrument is open for responses until 12 April 2022. Details can be viewed here to submit your response. Propertymark will be contributing to the consultation and if you have any views these can be emailed to our Policy Team.
Non-domestic rates
Rebecca Evans MS, Minister for Finance and Local Government is also considering proposals for a package of work to reform aspects of the non-domestic rates system in Wales. This will include a review of existing relief schemes and could encompass the eligibility of self-catering properties and other businesses for Small Business Rates Relief, ensuring support is targeted appropriately.
The Welsh Government’s decision to enable the council tax premium on second homes to be raised to a maximum of 300 per cent from April 2023 is somewhat surprising, given that 79 per cent of respondents to the consultation felt that the powers had 'very little or no effect' in tackling housing issues.
Just nine of 22 councils have opted to apply any premium on second homes in the 2022-2023 period, and second homes as a proportion of chargeable dwellings have increased by merely 0.19 per cent over the five years to 2021.
Despite questions remaining around the need for such interventions, the Welsh Government is forging ahead with profound changes to local tax systems and planning policy without fully understanding the extent of the issue.
