Seven Welsh councils with holiday home hotspots are considering increasing council tax on second homes.
Ceredigion, Pembrokeshire, Anglesey, Conwy, Powys, Carmarthenshire and Gwynedd are exploring new powers to charge up to 100% extra.
The Welsh Local Government Association said it meant second homes could make a “fair contribution” to the community.
However, Gwynedd said a potential loophole could mean councils were worse off. Changes to the Housing (Wales) Act 2014 mean councils have the ability to charge a premium on top of the existing council tax payments for second homes from the 2017-18 financial year.
Gwynedd has almost 5,000 second homes and is exploring the possibility of a tax hike, but a report to go before council on 3 March warns of a trend of properties transferring from the council tax regime to being “self-catering units”, which are commercially let for holidays, and pay business rates.
It warns: “The council must be aware that many of these properties would be subject to attempts to avoid paying the additional tax, and there are “exceptions” in the regulations where the premium cannot be raised.
“This tendency could accelerate if the premium is introduced and before resolving on introducing a premium, it is prudent to fully investigate its probable consequences on the council’s income.”
If second home owners decide to let out to customers for more than 70 days a year, then they would be eligible to apply for small business rate relief of 50% and the council is worried it could end up with less in tax from that sector.
A report to Pembrokeshire council estimated there were 3,000 second homes in the county and said charging up to 100% extra could raise “at least” an extra £2-£2.5m a year. Ceredigion, which has around 2,000 second homes, is also consulting on the plans, while Powys will consider a holiday home tax of either 30% or 50% at a meeting in March.
A premium will also be considered by Gwynedd, Anglesey, Conwy, Powys and Carmarthenshire.
However, Carol Peett of West Wales Property Finders, say this is an ill thought out idea which will hit the much need revenue second home owners bring to Wales; bring less, not more money into the Council’s coffers and certainly not help local first time buyers which has been the much lauded excuse that Pembrokeshire Council has used on numerous occasions to try and introduce these charges.
“The type of property owned as a second home is never going to be suitable or affordable for local first time buyers”, she says. “Second homes tend to be character properties set right out on their own, often down muddy tracks, which are completely unsuitable for young families as they are not near work places, schools, etc., and usually have high maintenance and running costs; or sea view houses or flats which again are impractical, even if their prices did drop dramatically”.
“The thing that would benefit local first time buyers and enable them to stay in the County would be a plentiful supply of starter homes in towns and for the younger generation working on their family farms to be allowed to build a second dwelling on the farm to accommodate the younger generation”. Penalising holiday home owners in the Country will backfire and hit the much needed holiday industry”.
If you are thinking of buying a second home, buy to holiday let, or moving to Pembrokeshire, Carmarthenshire, Ceredigion or Gower, give West Wales Property Finders a call on 01834 862816. We can find your perfect property for you. http://www.westwalespropertyfinders.co.uk