‘CATASTROPHE LOOMING FOR OUR INDUSTRY’
Fears second homes clampdown will see self-catering accommodation businesses priced out with dire knock-on effects for communities dependent on tourism
WELSH tourism providers fear a government clampdown on second and holiday homes will decimate the country’s visitor economy. The sector predicts new tax arrangements in Wales, designed to tackle housing shortages for local people, could open the floodgates to unregulated accommodation providers.
One landowner in South Wales is reported to be considering a sale of his entire stock of 80 residential lets.
Another in Powys fears her 21-bed selfcatering let will no longer be viable under the new taxation regime, depriving the local economy of thousands of pounds each year.
As her property, Gaer Hall in Guilsfield, near Welshpool, lies in a rural area far removed from the tourism pinchpoints of the West Wales coast, Margaret Bardsley believes it will struggle to meet the Welsh Government’s new occupancy rules.
Cardiff wants to put a squeeze on second and holiday homes by raising occupancy thresholds to at least 182 days per year. Currently, the occupancy threshold is 70 days.
Properties not meeting the thresholds will have to pay council tax rather than business rates. In some areas a council tax premium could be levied as high as 300%.
Ms Bardsley said: “These changes could be catastrophic for the visitor market.
“My property is available for let year-round, but getting it filled for 182 days each year is just not going to work in this part of the world, especially for people like me who have larger properties.
“If properties like ours become liable for the 300% council tax premium, it will decimate the tourism sector in Wales.
“This is a sector worth £2.8billion to the economy; around 8% of the country’s GDP.”
Ms Bardsley argues the Welsh Government is using a sledgehammer to tackle the problem while failing to recognise the distinction between second homes and regulated self-catering accommodation.
Cardiff says it wants to provide a “clearer demonstration” that affected properties are “genuine holiday accommodation businesses” that are making substantial contributions to their local economies.
Ms Bardsley said that is exactly what her business does, yet she and many other providers are being singled out for what’s happening elsewhere in Wales.
She estimates she will be facing around £6,000-£8,000 in extra costs per year under the new regime, without additional revenue.
“If we get a party of 20 people in, and they decide to go out, that could bring £500 to the local pub in one night, or £25,000 over a year, which could be the difference between survival and going out of business,” she said.
“It’s all very well adding a 300% council tax premium to a millionaire’s place in Abersoch, which he visits at weekends to sail his yacht, but that will only be an annoyance; it won’t force him to sell up, nor will it provide affordable accommodation for young people in the area unless new housing is built.”
Among members of the Furnished Holiday Lets Group, set up in Wales during the pandemic, there has been consternation at the taxation changes.
The Welsh Government’s Welcome To Wales strategy, which set its priorities for the visitor economy from 2020 to 2025,
Gaer Hall may struggle to meet minimum occupancy
advocates a “spend and spread” approach in which investment and innovation leads to more year-round tourism.
Under the new taxation regime, however, the sector feels seasonal operators will no longer be viable.
CLA Cymru, which represents farmers and landowners across Wales, is alarmed at the new regime which, it said, “punishes” a sector that had been encouraged by Cardiff to diversify into holiday lets.
Its director, Nigel Hollett, said providers away from the West Wales coast may become the “unintended victims” of the Welsh Government’s efforts to stem the country’s housing crisis.
Nor is it likely to solve the problem, he said.
“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,” he said.
CLA Cymru believes a lack of new housing is the reason for the crisis.
It wants to see investment in the planning system to enable the building of more homes. Suitable land also needs to be released for “sustainable development” and suitable buildings must be identified for conversion, from large urban sites to rural barns and former business premises.
Given encouragement, landowners can be part of the solution, said Ms Bardsley.
She applied in December 2019 for planning consent for 28 affordable homes.
The idea, she said, was to cater for a need that has grown out of the lack of any local housebuilding in the past 15 years.
As the former chief executive of a housing association, Ms Bardsley was clear there was a real appetite for affordable lets in the area.
“I’ve arrived here 35 years ago,” she said.
“If you consider the average size of a primary school classroom, it suggests that, during this time, around 900 children have grown up in an area with little or no new builds. So, there’s obviously going to be a housing deficit.”
Despite this, her planning application has yet to appear before councillors. Ms Bardsley is unclear why.
Planning authorities “dragging their feet” over new housing and a general reluctance to countenance new builds are drivers of the accommodation crisis, she believes.
Another issue ruffling feathers in the self-catering accommodation sector is government policy that requires “everdemanding” Energy Performance Certificates (EPCs) for properties.
For traditional, stone cottages – typical of the tourism sector in Wales – upgrading to tough new insulation and heating requirements can be prohibitively expensive.
One provider in North Wales fears he may have to dispose of around 12 traditional stone cottages because of the rising costs.
Mr Hollett, of CLA Cymru, said the future of the tourism sector in parts of Wales is looking bleak.
He said: “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, without any real evidence they will significantly improve the supply of affordable housing.”
No evidence has been presented that targeting the tourism sector will increase affordable housing stocks
NIGEL HOLLETT CLA CYMRU DIRECTOR