New Tax Rules for Second Homes in Wales

Wales is a beautiful part of the world and it is small wonder why many people own second properties in Wales. This is, however, causing a lack of affordable housing in certain communities in Wales, making it difficult for locals to own their own property. The Welsh Government has announced that it is going to try to tackle this shortage of affordable properties by changing some of the tax rules around second homes. In this article we will take a look at those changes which are being introduced as part of the co-operation agreement between the Welsh Government and Plaid Cymru.

Small Harbour with Surrounded by Colourful Old Buildings. Old Town Tenby, Wales.

Designated Member of Plaid Cymru, Sian Gwenllian MS said:

“It is clear that we as a country are facing a housing crisis. So many people cannot afford to live in their local areas, and the situation has worsened during the pandemic. These changes will make a difference, enabling councils to respond to their local circumstances, and start to close the loophole in the current law. It’s a first, but important, step on a journey towards a new housing system that ensures that people have the right to live in their community.

“Through the Co-operation Agreement, we are committed to introducing a package of measures to tackle the injustices in the housing market. Today’s announcement is just one part of that wider package. Second homes are a symptom of a wider problem – a market that treats property, not as a home, but as a way of making a profit. By working across the parties in the Senedd, we will introduce more measures, as soon as we can, to make house prices and rents genuinely affordable for people.”

Council Tax

From April 2023 local councils will be able to charge council tax premiums on second homes and long term empty properties of 300%. Currently they are capped at 100%. This means that those with either a second home in Wales or those with properties that are empty could face bills of up to 4 times the normal rate of council tax. The Government is also offering additional funding to local councils who opt to apply these premiums to the council tax bill for second homes.

Holiday Lets

Currently holiday lets fall under business rates rather than council tax if they are available for let for 140 days and actually let for 70 days in any 12 month period. These rules are also being changed to ensure that properties are actually being used as holiday accommodation. The new rules, again coming into force in April 2023 will change to require a property to be available for let for at least 252 days in any 12 month period and actually be let for at least 182 days to qualify for business rates. If this is not the case, then these properties will fall under the council tax regime and be liable for the premiums for second homes.

More information about Welsh second homes and Holiday Lets can be found here on the Government website.