Wales Facing 'Massive Tax Hike' on Vacant Homes
It's designed to tackle soaring property prices in local communities
Second home owners in Wales could be hit with a massive tax hike next year as part of a move to tackle the negative impact vacant houses, holiday lets and soaring property prices are having on local communities.
The Welsh Government has announced it is increasing the maximum level local authorities can set council tax premiums on second homes and long-term empty properties to 300%.
It means that, from April 2023, councils will be able set the premium at any level up to the maximum, depending what is appropriate for their local circumstances.
Some may choose to apply different rates for second homes and long-term empty dwellings.
Currently, the maximum premium councils can charge is 100%, therefore the new policy constitutes a possible tax rise of 200%.
Councils are being encouraged to spend any additional money brought in because of the increase on improving the supply of affordable housing.
Climate change minister Julie James said: "We want people to be able to live and work in their local communities, but we know rising house prices are putting them out of reach of many people, exacerbated by the cost-of-living crisis we are facing.
"There is no easy answer or quick-fix solution. This is a complex problem that requires a wide range of actions. We continue to carefully consider further measures that could be introduced, and these changes are the latest steps we are taking to increase the availability of homes and ensure a fair contribution is made."
Finance minister Rebecca Evans added: "These changes will give more flexibility to local authorities and provide more support to local communities in addressing the negative impacts that second homes and long-term empty properties can have. They are some of the levers we have available to us as we seek to create a fairer system."
The criteria for self-catering accommodation being liable for business rates instead of council tax will also change.
At the moment, properties that are available to let for at least 140 days and that are actually let for at least 70 days will pay rates rather than council tax.
But from next April, the threshold will increase for properties available to let for at least 252 days and actually let for at least 182 days in any 12-month period.
The ministers said the change is intended to provide a clearer demonstration that the properties concerned are being let regularly as part of genuine holiday accommodation businesses that are making a substantial contribution to the local economy.
The measures are part of a wider commitment to address the issue of second homes and lack of affordable housing facing many communities in Wales, as set out in the Co-operation Agreement between the Welsh Government and Plaid Cymru in 2021.
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."