Prince William has said he plans to take the family to Wales, staying in rentals and B&Bs just like ordinary holidaymakers. He needs to do it sooner rather than later, with the Welsh government, led by the first minister, Mark Drakeford, clamping down on holiday lets and owners selling up.
Drakeford introduced punitive council tax and business rate measures aimed at curbing the number of holiday homes and Airbnbs in July 2022. The first minister, who admits his family has owned “a chalet” in Pembrokeshire for almost three decades, but insists it’s not classed as a second home (conveniently), is keen to convert tourist properties to local long-term ownership. Critics say he’s taking a very large sledgehammer to crack a valuable nut and failing to see the bigger picture.
Panic followed Drakeford’s announcements, prompting a flood of holiday lets and Airbnbs onto the market as landlords rushed to sell up, raising fears of damage to local economies reliant on tourism.
“Hosting provides vital income to many families across Wales as the cost of living continues to rise,” says Theo Lomas, head of public policy, northern Europe, at Airbnb. “New rules must . . . ensure that Welsh households are not prevented from sharing their homes and accessing income they cannot afford to lose.”
Economic activity linked to short-term lets was worth 4.3 per cent of Welsh GDP in 2021, garnering £3 billion and supporting more than 65,000 jobs, according to research by Sykes Holiday Cottages.
“The rules announced by Mark Drakeford last Summer were misleading, to say the least,” says Carol Peett, managing director at West Wales Property Finders”. http://www.westwalespropertyfinders.co.uk.
“He implied council tax on holiday homes in Wales could increase by up to 400 per cent. This was then toned down to 300 per cent, but what he failed to make clear was that the rate was down to each individual local council to decide and was not an umbrella amount.”
“Drakeford also announced that those renting out their holiday homes would now qualify for business rates, and so avoid punitive council tax, only if the property was available to rent for at least 252 days a year and had guests renting it for at least 182 days. This is significantly more than the previous business rate qualification of 140 days’ availability and 70 days let”.
Peett says that, for some people, the situation has balanced out. Council tax increases have not been as punishing as expected in some areas, reducing the need to qualify for business rates.
However, near Solva, Pembrokeshire, in the west, George Corney has this week taken the reluctant decision to sell her two holiday properties, a converted chapel and a bungalow with sea views, rented out through West Wales Holiday Cottages.
“I’ve just gone, I can’t do this any more,” she says, citing the cost of living, rising mortgage rates and the fear of council tax bills of £4,000 per property hanging over her if she doesn’t meet the minimum occupation threshold for business rates this year.
Corney, 46, a full-time psychology-degree student from west Berkshire, bought the chapel 15 years ago for family holidays with her husband and two sons, now aged 15 and 18, adding the bungalow to her portfolio a few years later. “We also started letting out the chapel, so we had two great cottages, both sleeping eight,” she says, “but the bills, the council tax and the new rules that you’ve got to rent for 182 days a year to be exempt from council tax, and the spiralling mortgage costs on top, it’s just too much of burden.”…….
Uncertainty is not helped by talk of plans for a new tourism tax in Wales — “another ludicrous idea from Drakeford that will impact the economy”, Peett says. “It will be the hotels and actual B&Bs, as opposed to Airbnbs, that a tourism tax is most likely to hit.”
Drakeford is also keen on a Welsh licensing scheme for holiday properties, similar to the one mooted for Edinburgh, slammed as “onerous and oppressive” by a crowdfunded legal challenge and judged unlawful by Scotland’s Court of Session at the start of June, and put back to the drawing board.
Ben Edgar-Spier, head of regulation and policy at Sykes Holiday Cottages, says this kind of rapid-fire regulation causes more harm than good, and recent events in Wales are ringing alarm bells elsewhere.
No one even knows how many second homes there are in the UK, but according to analysis undertaken by the Department for Levelling Up, Housing and Communities between 2018 and 2019, 495,000 English households owned second homes in the UK. However, this doesn’t take into account Welsh, Scottish and Northern Irish households with more than one property.
What Edgar-Spier would really like is a national register of all holiday homes, supporting the Westminster government’s call for evidence into such a scheme, launched in April.
Without this, he argues, no one has any idea of the size, scope and subtle differences in the holiday home/lets sector, so policies work from no concrete basis: “In Wales alone it varies from people renting out a room in Cardiff when there’s a rugby international on to ten-bedroom cottages in the Brecon Beacons.”
There needs to be a much clearer definition between second homes that are not rented out and left empty for much of the year and those run as businesses, he adds.
He also wants tax incentives given to developers to free up brownfield land and release planning permissions in tourism-dominated areas of high housing need, plus more onus on local councils to convert redundant buildings, such as office blocks and town centre premises, into homes for local people.
In Wales, Peett believes a positive step would be for the Welsh government to rule that no properties under the average cost of a property in the principality, about £250,000, could be sold as a second home.
She and Edgar-Spier agree that Drakeford’s so-called solutions are too simplistic — holiday homes are not always suitable for first-time buyers or young families.
“It is the terraced houses in places like Tenby, which have been purchased by people mainly from other parts of Wales, that are the ones which would suit young local people,” Peett says. “Not the chocolate-box stone cottages that look charming and attract holidaymakers, but in reality are dark, cold, damp and draughty to live in and often nowhere near schools or other amenities.”
The Sunday Times – Sunday, 2nd July 2023 – New holiday let rules in Wales ‘doing more harm than good’ (thetimes.co.uk)