Punishing tourism will not solve the housing crisis!

The Welsh Government is empowering local authorities to charge premiums of up to 300 per cent on second homes and changing the tax arrangements on self-catering holiday lets. The news comes just days after the consultation deadline passed - leading to inevitable questions about the process
Holiday cottage front door

The government announcement is here.

“Tourism is a vital part of the Welsh rural economy. Farms have been encouraged or forced to diversify, and the Welsh Government itself has spent millions on a sector which now contributes around £2.8 billion to the economy,” says CLA Cymru Director, Nigel Hollett.

“The affordable housing crisis needs to be solved, but we must ensure that farms and land managers whose livelihood – and the income of their employees – who depend on property management, are not the victims of a central failure to address an important social issue.”

“No evidence has been presented that targeting the tourism sector will increase the affordable housing stock, or that funds raised by councils will be committed to residential building.”

“The solution is to improve the planning system to enable the building of more homes, to release suitable land for sustainable development and to encourage the conversion of suitable buildings - from large-scale urban retail sites - to rural barns and former business premises.”

“Equally, government policy to require ever-demanding Energy Performance Certificates (EPCs) from traditionally-built, rural rented properties – is exacerbating the affordable housing crisis, as many private rented properties become unviable and are inevitably sold – probably into the second homes market.”

“The rural tourism industry is still to recover to pre-pandemic levels. Many who manage self-catering holiday accommodation see this - and more proposals to come - and see that the Welsh Government has no intention to sustain a level playing field for our tourism sector with other parts of the UK.”

Nigel Hollett, CLA Cymru Director

The change in criteria for self-catering accommodation being liable for Business Rates instead of Council Tax is set to change, as the number of days properties must be available to let is likely to increase to 252 days from 140 days a year. The criteria for self-catering accommodation being liable for business rates instead of council tax will also change from next April. Currently, 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. The change will increase these thresholds to being available to let for at least 252 days and actually let for at least 182 days in any 12-month period.

“This will create an issue for seasonal rural holiday lets which are unsuitable for year-round occupation.

Nigel Hollett concludes, “The big picture is that the Welsh Government’s proposals will lead to a reduction in capacity for visitors to Wales – meaning reducing the tourist-pound spent in attractions, pubs, restaurants and shops. The proposals are an open-goal for the unregulated, online sources of holiday accommodation – undoing many years’ work done by Visit Wales, the Welsh Government’s own agency, and divorcing this part of the sector from government. Finally, there’s no real evidence that this will make a strong contribution to improving the supply of affordable housing.”