Monday, December 6, 2021
Real EstateUK

Second home owners to pay higher taxes to tackle crisis

higher-taxes

National and local taxation schemes could be put in place to ensure second home owners in Wales make a fair contribution to the communities in which they buy

Part of Wales will become a pilot area for new measures such as changes to tax and planning rules in a bid to tackle Wales’ second homes crisis.

Plans will be laid out on Tuesday with the Welsh Government due to decide an area to trial the new measures before they are potentially rolled out across the whole country.

The review will look at changing planning law and making all holiday accommodation owners register it as such. National and local taxation schemes could be put in place to ensure second home owners make a fair and effective contribution to the communities in which they buy.

Since 2017 councils have been able to raise a premium on council tax on second homes. Local authorities in Gwynedd and Swansea both charge double council tax for holiday homes but rising numbers of second homes are being designated as businesses meaning owners pay no council tax at all.

At the beginning of 2020 it was estimated there were 24,423 second homes in Wales which could be taxed but that did not include holiday units which are registered for business rates. Welsh Government figures show there are an estimate 4,900 chargeable second homes in Gwynedd but as well as those there are another 1,976 holiday accommodation units which means a total of 10.76% of the total housing stock is holiday homes. Pembrokeshire, Anglesey, and Ceredigion are the counties with next-highest numbers of holiday homes.

However a detailed report by Dr Simon Brooks into second homes in Wales found that even within counties the issue of second homes was more pronounced in certain areas. In the Llanengan community council area of Dwyfor, which includes Abersoch, 39.8% of properties are second homes. In Llanfelog, Anglesey, the figure is 25.5%.

The Welsh Government says that as well as looking at the rules on second homes it will also look at affordability of homes and the amount of housing that is available.

It could look at introducing practical measures such as changing the figures in the Home Buy scheme. The Welsh Government scheme provides an equity loan to assist purchasing an existing property. Currently that operates on a 50/50 model but that could change so an individual has to pay less to get on the housing ladder.

Empty homes, of which there are more of in Wales than second homes, will also be looked at as part of the review, it is understood.

Welsh Government officials are looking at a scheme in Scotland which proposes a licensing scheme for holiday lets which will allow a local authority to limit numbers of such properties.

Plans to create a registration scheme for all holiday accommodation and a consultation on changes to local taxes will begin over the summer.

A Welsh Language Community Housing Plan, to protect the particular interests of Welsh-language communities, will be published for consultation in the autumn.

Climate change minister Julie James said: The continuing rise of house prices mean people, especially younger generations, can no longer afford to live in the communities they have grown up in. A high concentration of second homes or holiday lets can have a very detrimental impact on small communities and in some areas could compromise the Welsh language being spoken at a community level.

She said: We have already taken strides on some of these issues – last year we became the only nation in the UK to give local authorities the power to introduce a 100% council tax levy on second homes. But the urgency and gravity of this situation calls for further intervention, which means real and ambitious actions are delivered at pace, to inject fairness back into the housing system.

Responding to the Welsh Government’s plan, Plaid Cymru’s Mabon ap Gwynfor MS said: This so-called “ambitious approach” to tackle the second homes housing crisis is an exercise in kicking the problem into the long grass without taking the necessary urgent action to deal with the crisis facing our communities.

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