Welsh tourism bosses say 'devastating' new rule will cripple sector

Welsh tourism bosses say ‘devastating’ new rule that second homes and holiday lets must NOT stand empty will drive up prices and cripple holiday trade

  • The Welsh Government has brought in new holiday let rules to collect money 
  • From next year they must be let for at least 182 days a year to avoid council tax
  • Currently those let for 70 only have to pay business rates, saving owners money
  • Have the new rules impacted your business? E-mail: [email protected] 

Tourism leaders in Wales have reacted with horror to confirmation of new occupancy rules for second homes and holiday lets.

From April 1, 2023, the Welsh Government will insist that self-catering properties are let for at least 182 days each year in a move critics say will ‘decimate’ the Welsh tourism industry.

Holiday lettings firm Finest Retreats, which promotes 29 holiday cottages in Wales, warned the challenging occupancy target will hit rural economies the hardest by driving up prices and making the country a ‘less attractive place to visit’.

Tom Giffard, Welsh Conservative shadow tourism minister said it was a ‘devastating blow’, adding: ‘These new letting requirements will frankly be impossible for many self-caterers to meet.’

The Wales Tourism Alliance (WTA), which represents 6,000 tourism operators in Wales, believes 84% of the country’s holiday lets could now be forced to close.

WTA chair Suzy Davies said genuine holiday businesses will be caught up in a policy designed to clamp down on second homes. ‘Like dolphins accidentally caught in fishing nets, these businesses will die,’ she cautioned.

Worm’s head Rhossili Bay at sunset on the Gower peninsula in West Glamorgan South Wales

The new rules will hit second homes and holiday lets. Pictured, Ferndale in the Rhondda Valley

Barafundle Bay in Pembrokeshire is a popular location for holidaymakers and tourists in Wales

On Tuesday, finance minister Rebecca Evans issued a written statement confirming Cardiff was pushing ahead with its plans despite opposition from the tourism sector. As with the Welsh Government’s new council tax policies, the approach is designed to tackle the housing crisis in Welsh-speaking communities in holiday hotspots.

The minister acknowledged that the stronger criteria ‘may be challenging for some operators to meet’. But she 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.’

To continue paying business rates, holiday rentals must be let for 182 days from April 1, 2023. Currently, the threshold is just 70 days. If holidays fail to meet the threshold, they pay council tax instead – and from April 2023 local counties will have the power to charge a council tax premium of up to 300%, effectively quadrupling bills.

The approach was conceived as a way of stopping second homeowners from ‘gaming’ the taxation system – offering casual lettings to avoid paying higher council taxes. Genuine accommodation providers supported moves to raise occupancy thresholds to some extent (105 days was favoured) – but not to 182 days-a-year. They feel they are being unnecessarily penalised by an approach that is far too blunt.

The beach at Rhosneigr, Anglesey, where tourists often frequent for trips away from home

Abersoch, North Wales, is known by some as Cheshire by the Sea due to its popularity

What are the new Welsh home and let rules?

In Wales at the moment the rules for second homes and holiday lets are far more generous.

Under current legislation properties available for let for at least 140 days, but only let for 70, only have to pay business rates.

The new rules – which come in next year in April – are much stricter.

They say properties will need to be made available for at least 252 days, and actually let for 182.

If they don’t fulfil these criteria they will have to pay council tax, which will be more expensive for owners. 

Some 400 self-catering providers provided the Welsh Government with evidence of the damaging impact the policy would have on their businesses. The WTA said it found it hard to believe their arguments had been dismissed and claimed the move would now result in more second homes.

‘These were the experiences of local people who have invested in micro and small businesses and have been contributing to the local economy, often for many years,’ said Suzie Davies.

‘This may well stop second homeowners claiming they are businesses in order to game the local taxation system. We also want that stopped. But in setting these thresholds so high, the Welsh Government will be taking out local businesses too. These are the professional businesses who, however innovative they are, cannot create summer-style demand throughout the year.

‘The irony is that they will be selling their properties to wealthier outsiders who can afford high council tax. So, fewer local businesses, more second homes, zero effect on local housing stock and zero effect on house prices.’

If Welsh tourism is severely damaged by the new policy, jobs will be lost, affecting the ability of local people to afford property, the industry argues. After three years of economic turmoil, and with the world in the grip of a cost-of-living crisis, Cardiff should be doing more to support its tourism sector, believes Aberconwy MS Janet Finch-Saunders.

She labeled the approach being taken as ‘one of the most regressive tax policies in Europe’. She added: What’s being suggested by the Welsh Government won’t only hit working families and communities but drag the Welsh tourism sector to rock bottom.’

As some self-catering properties are restricted by planning conditions, and so will struggle to meet the new letting criteria, Cardiff is to explore a possible exemption. Local councils will also be given guidance on this issue.

Landowners group CLA Cymru believes there other circumstances in which exemptions are needed. These include holiday lets that share facilities with owners’ homes, and farms that offer seasonal rentals. It also wants consideration for large holiday lets that rely on families or groups visiting during the school holidays, and are infrequently occupied at other times.

CLA Cymru fears cash-strapped local authorities will be unable to apply and police the legislation ‘fairly and consistently’. It also wants to see a ‘safety net’ for genuine accommodation businesses that will no longer be viable – especially at a time when bookings are already falling as costs rise.

One arch critic of the Welsh Government’s approach to tourism is Ashford Price of the Welsh Association of Tourism Attractions (WAVA.

He opined: ‘This proves without doubt that the current administration in Cardiff is anti-tourism and also anti-English. The new rules will cost jobs and businesses will close through no fault of their own.’

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