Tourism officials in Wales reacted in horror to the confirmation of new occupancy rules for second homes and holiday rentals. From April 1, 2023, the Welsh Government will insist that self-catering properties be let for at least 182 days a year, which critics say will ‘decimate’ the Welsh tourism industry.
Holiday rental company Finest Retreats, which promotes 29 holiday homes in Wales, has warned that the tough occupancy target will hit rural economies the hardest, driving up prices and making the country a ‘place less attractive to visit. Tom Giffard, Welsh Conservative Minister for Ghost Tourism, said it was a ‘devastating blow’, adding: ‘These new rental requirements will frankly be impossible for many independents to meet.
The Wales Tourism Alliance (WTA), which represents 6,000 tourism operators in Wales, estimates that 84% of holiday rentals in the country could now be forced to close. WTA President Suzy Davies said genuine holiday businesses would be caught up in a policy to crack down on second homes. “Like dolphins accidentally caught in fishing nets, these companies will die,” she warned.
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On Tuesday, Finance Minister Rebecca Evans issued a written statement confirming Cardiff was pushing ahead with its plans despite opposition from the tourism sector. As with the Welsh Government’s new municipal tax policies, the approach is designed to tackle the housing crisis in Welsh-speaking communities in holiday hotspots.
The minister acknowledged that the stricter criteria “could be difficult for some operators to meet”. But she said: “The purpose of the change is to help ensure that landowners make a fair contribution to local communities, for example by increasing their contribution to the local economy through greater rental activity, or by paying council tax on their properties.”
To continue paying business rates, vacation rentals must be rented for 182 days beginning April 1, 2023. Currently, the threshold is only 70 days. If the public holidays do not meet the threshold, they pay council tax instead – and from April 2023 local counties will have the power to charge council tax premium of up to 300%, thus quadrupling the bills.
The approach was designed as a way to prevent second home owners from ‘gaming’ the tax system – offering occasional rentals to avoid paying higher council tax. Genuine accommodation providers supported moves to raise occupancy thresholds to some extent (105 days were preferred) – but not to 182 days per year. They feel unnecessarily penalized by an approach that is far too brutal.
Some 400 independent providers have provided the Welsh Government with evidence of the detrimental impact the policy would have on their businesses. The WTA said it found it hard to believe their arguments had been dismissed and claimed the move would now result in more second homes.
“These are the experiences of local people who have invested in micro and small businesses and contributed to the local economy, often for many years,” said Suzie Davies. “This may well prevent second home owners from pretending to be businesses in order to play around with local taxation. We also want this to stop.
“But by setting these thresholds so high, the Welsh Government will also be weeding out local businesses. These are professional businesses which, however innovative, cannot create year-round summer demand.
“The irony is that they will sell their properties to wealthier foreigners who can pay high council tax. So fewer local businesses, more second homes, no effect on local housing stock, and no effect on house prices.
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If Welsh tourism is badly damaged by the new policy, jobs will be lost, which will affect the ability of local people to afford property, the industry claims. After three years of economic turmoil and with the world in the throes of a cost of living crisis, Cardiff should do more to support its tourism sector, Aberconwy MS Janet Finch-Saunders believes.
She called the approach adopted “one of the most regressive tax policies in Europe”. She added: What is suggested by the Welsh Government will not just hurt working families and communities, but will drag the Welsh tourism sector to an all-time low.
As some self-catering properties are restricted by planning conditions and will therefore struggle to meet the new rental criteria, Cardiff needs to explore a possible exemption. Local councils will also receive guidance on this issue.
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Landowners group CLA Cymru believes there are other circumstances where exemptions are necessary. These include vacation rentals that share facilities with owners’ homes and farmhouses that offer seasonal rentals. He also wants to consider large vacation rentals that depend on families or groups visiting during school holidays and are rarely occupied at other times.
CLA Cymru fears that cash-strapped local authorities will not be able to apply and enforce the legislation “fairly and consistently”. He also wants to see a ‘safety net’ for genuine accommodation businesses that will no longer be viable, particularly at a time when bookings are already falling as costs rise.
Ashford Price of the Welsh Tourist Attractions Association (WAVA) is a leading critic of the Welsh Government’s approach to tourism. He said: “It proves beyond any doubt that the current administration in Cardiff is anti-tourism and also anti-English. The new rules will cost jobs and businesses will close through no fault of their own.
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