‘Anti-English’ tax threat to future of holiday cottages across Wales
AMAJORITY of self-catering operators fear they will be forced to close if a new lettings regime is introduced in Wales.
Critics claim the proposals will “decimate” the country’s tourism sector and will do little to resolve the country’s housing crisis.
One large attraction has already announced it is abandoning plans to build 10 luxury units and will now spend the money in England instead.
The National Showcaves Centre for Wales at Dan Yr Ogof, Brecon Beacons, currently has 20 self-catering units, but its booking agents cannot guarantee the attraction will meet the new letting requirements.
Its chairman, Ashford Price, warned of the “serious economic damage” caused by Welsh Government proposals that would give tourism sectors in England and Scotland a huge competitive edge.
Many Welsh businesses will have “no option” but to close down their business and make staff redundant, said Price, who claimed the proposals were “anti-English”.
His views have been backed by industry bodies and opposition politicians. A survey more than 1,500 businesses by the Wales Tourism Alliance (WTA) found that 84% of selfcatering operators canvassed believe they won’t be able to continue new lettings thresholds are imposed.
In a joint statement with UK Hospitality Cymru (UKHC) and Professional Association of Self Caterers UK (PASC UK), the WTA called on the Welsh Government to amend its plans. They said: “As a tool to bring properties back into a market which is affordable to local people, it will not work. Rather, it will reduce local owners’ ability to earn an income and cause a decline in secondary jobs in hospitality, retail, house maintenance and cleaning. It will not safeguard the Welsh language as these businesses will be lost to wealthier outsiders prepared to meet the higher costs of having a second home or self-catering businesses in Wales.”
In a move designed to clamp down on the second and holiday homes crisis, which has left local people unable to afford their own properties, Cardiff wants to put a squeeze on the sector by raising occupancy thresholds to at least 182 days per year.
Failure to meet this threshold could see legitimate holiday-let business owners face a second homes Council Tax premium of up to 300%.
A business currently paying £10,000 in rates could therefore face increased bills of up to £40,000, said Mr Price. This will make holidays let “untenable” for many of the 8,000 self-catering properties in Wales, especially for smaller and mediumsized operators.
As 14% of the country’s 34,000 farms now have some form of tourism element, often barn conversions part-funded by Welsh Government diversification grants, the rural economy is likely to be hit hard, he said.
Other quirks could include the charging of Council Tax on cottages that have planning permission preventing them from residential use.
Mr Price said: “If the Welsh Gov
ernment goes ahead with the new lettings requirements, Wales will lose a massive number of self-catering operators. Many tourism jobs will disappear and the local economy will suffer as there will be fewer visitors to buy their goods.
“Wales will not be able to compete with similar self-catering operations in England and Scotland. The only way they could fund the increased bills would be to put prices up at a time when families are facing the biggest cost of living crisis since the 1950s. Many families are looking for competitive prices in order to have a holiday at all.”
Under the plans, to qualify for business rates, self-catering properties to be available to let for at least 252 days and actually let for at least 182 days.
Currently, the actual occupancy threshold is just 70 days. From April 2023, a self-catering business not meeting the new threshold will incur Council Tax instead of business rates – and in some counties the Council Tax could be hiked 300%.
Addressing the issue in the Senedd,
North Wales MS Mark Isherwood said holiday-let business owners had contacted him to express their concerns.
Examples included a Gwynedd family with two holiday lets in their garden which are fully booked during summer but less busy in winter.
“I fear we will end up bankrupt,” they said.
Another operator told Mr Isherwood: “Our holiday let property is located six metres from our front door. Clearly not a second home and all on the same title deed. We have been trading for the past seven years and have exceeded 182 days let in four out of the seven years.”
The sector is concerned the Welsh Government has not carried out impact assessments on the consequences of the new lettings regulations – or for the proposed tourist tax in Wales.
This week Aberconwy MS Janet Finch-Saunders accused the administration of “steam rolling the backbone of Welsh industry and economy”.
The Wales Tourism Alliance, with UKHC and PASC UK, is calling for amendements to the lettings regulations. These include:
Increasing the occupancy threshold for holiday let businesses from 70 to 105 days. This is in line with HMRC taxation rules.
exempting properties, which are limited by planning permission to be short-term commercial lets, from additional council tax payments if they do not hit the 105 days occupancy target. This includes farm diversification or buildings within the boundaries of the owner’s own home; and
amending occupancy thresholds to take account of repairs and property improvements. Similar allowances should also be made for closure due to ill-health or caring responsibilities.
The three organisations said many family-run holiday letting businesses will close if proposed changes go ahead. The properties may then be sold to buyers from outside of Wales.
However, they accepted the need to raise the occupancy threshold to curb potential abuses of the system.
Recommending 105 days, they said: “Raising the bar to 182 days will have a hugely detrimental impact on the genuine businesses that operate in the sector. It is far above average occupancy and will simply drive prices down as owners race to meet the 182-days target.
“A decline in the availability of selfcatering businesses will deter tourism, on which many hospitality businesses depend. Local pubs, restaurants and other hospitality and leisure businesses will see a severe drop in footfall at key tourist times.”
The Welsh Government said its proposals were part of a wider approach to addressing the negative impact of second homes and longterm empty properties in many Welsh communities.
A spokesperson said: “The change in criteria is intended to ensure properties involved are being let regularly as part of genuine holiday accommodation businesses, making a substantial contribution to the local economy. We consulted on the development and implementation of these plans, and will continue to carefully consider the effect any changes have.”