Questions are regularly being asked of the Welsh Labour Government on our industries behalf. These can either come prompted direct from constituents (i.e., you); WTA and its member organisations direct, or via the Tourism and Hospitality Cross Party Group chaired by Sam Rowland MS.
The Self Catering industry is reeling from the new 182 threshold, so keeping this issue at the top of the agenda continues to be of great importance as it looks like to reaching 2022/23 is going to be difficult if not impossible for many self caterers. The problem is not so much that a self catering business may have to pay Council Tax if we miss 182, it is that the property is deemed a second home and then has to pay up to a 300% premium. This is why we need a balanced mix of exemptions. The support from opposition MSs is appreciated and much needed. The following are two recent examples of tabled questions:
Jane Dodds MS - Tabled Question: What consideration has the Minister given to aligning Welsh regulations with respect to furnished holiday let businesses to HMRC’s 105 occupancy days, as opposed to 182 occupancy days?
Answered by Minister Rebecca Evans MS, Finance and Local Government - 20/09/2023
The Welsh Government considered a range of options for the letting criteria used to classify self-catering properties for local tax purposes, including at least 105 days actually let. The 182 days letting criteria reflect the settled policy position reached following consideration of a range of relevant factors, including that for a self-catering property to be treated as non-domestic for local taxation purposes it should operate as a business for the majority of the year.
The Welsh Government’s Regulatory Impact Assessment (RIA) was published alongside the legislation. The RIA includes the available evidence in relation to historic occupancy but it is not possible to predict how may properties will meet the criteria in future. The Welsh Government continues to monitor the effect of the legislation but has no plans to undertake a formal review of the changes to the self-catering criteria in the short-term nor in isolation from the broader package of measures within our three-pronged approach to tackling the impact of large numbers of second homes and holiday lets can have on communities and the Welsh language. Such a commitment could create uncertainty for the self-catering sector, which is unlikely to be helpful in diverting its focus from responding to the criteria in place now and for the foreseeable future.
The Welsh Government does not intend to consider exemptions from the letting criteria, which apply equally to all self-catering properties across Wales. The letting thresholds apply nationally and consistently because they define a key aspect of the system: whether a property is treated as a domestic dwelling or a non-domestic holiday let for local tax purposes. There are no exemptions to this definition and this is not a new principle.
The Welsh Government has recognised that some self-catering properties are restricted by planning conditions preventing permanent occupation as someone’s main residence. We have extended the existing exceptions to council tax premiums to include properties with a planning condition which specifies that the property may only be used for holiday let or which prevents their permanent occupation as a person’s sole or main residence. Such properties would become liable for council tax at the standard rate if they do not meet the letting criteria, but they could not be charged a premium. We have issued updated guidance to local authorities regarding the implementation of council tax premiums on second homes and long-term empty dwellings. Local authorities also have discretionary powers to reduce council tax bills for particular dwellings or classes of dwellings.
This work is being carried out in collaboration with Siân Gwenllian MS, the Plaid Cymru designated lead member, as part of the Cooperation Agreement between the Welsh Government and Plaid Cymru.
Marks Isherwood, MS – Question at Plenary – 27/09/2023 'Thank you. As a constituent e-mailed a fortnight ago regarding the 182-day threshold for holiday lets, 'Same old is being trotted out by the Welsh Government. None of their statements is being borne out by facts. Everyone has been dreamed up to prop up the rhetoric.'
Regarding the socioeconomic impact, a survey commissioned by the Wales Tourism Alliance, UKHospitality and the Professional Association of Self-Caterers UK already shows that fewer than 25 per cent of Welsh self-caterers will hit the threshold in this year of soft demand, higher mortgages and a cost-of-living crisis, even though over 70 per cent have said that they are discounting to try and achieve it. How, therefore, do you respond to the legitimate holiday small business owner in Denbighshire, who e-mailed: 'We've taken the decision to cut our losses, salvage what's left of our mental health and close down', and to the legitimate self-catering small business owner in Flintshire, whose property is now on the market, who e-mailed: 'A number of major lenders have said that they would not provide mortgage support, which would seriously affect people's ability to sell their property'? These are two examples, sadly, among many that I am receiving.
Mark Drakeford MS, First Minister’s response
The Welsh Government's policy is there for a reason. It is there to distinguish properly between holiday lets that are organised on a commercial basis and those that fall below a commercial threshold. The number of days that a property has to be available for letting, and the number of days that it has to be let, are there to make that distinction. If you are a business, then it is reasonable that you let your property for the number of days that we now require in Wales. If you don't do so, that doesn't mean that you can't go on letting your property, it simply means that you don't benefit from the business rate reliefs that would otherwise be available to you; you simply pay the council tax like everybody else and you let your property for fewer days. There's nothing unfair about that. What it actually is fair to every other taxpayer.