New powers for local authorities to address impact of second and empty homes come into force
Pwerau newydd yn dod i rym i awdurdodau lleol fynd i’r afael ag effaith ail gartrefi a chartrefi gwag
Welsh communities will be better supported to address high levels of second home ownership and empty properties as new local tax rules come into force today.
It marks another milestone in the implementation of a series of measures being introduced as part of the Welsh Government’s Co-operation Agreement commitment with Plaid Cymru to address the impact of second homes and empty homes on communities across the nation.
The rules have become operational following national and local consultations, meaning that local authorities are now able to put their strengthened levers into practical effect.
Measures are part of efforts to ensure everyone has the chance to live in their local community and to improve the availability and affordability of housing to rent and to buy for those on local incomes.
Local authorities are now able to set and collect council tax premiums on second homes and long-term empty properties at up to 300% – up from 100% – with councils able to decide levels based on their local needs.
Five councils have increased the premium charged for second homes in 2023-24, with another seven set to introduce one from April 2024.
Three councils have increased the long-term empty property premium in 2023-24, with another four introducing one for the first time, and another two planning to introduce one in April 2024.
The criteria for holiday lets being liable for non-domestic rates instead of council tax have also been strengthened, with the intention of providing a clearer demonstration that properties are being let regularly as part of genuine holiday accommodation businesses making a substantial contribution to the local economy.
To accompany this change revised statutory guidance has been issued to local authorities, and a commitment to introduce further exceptions to the regulations in the Senedd fulfilled.
Rebecca Evans, Minister for Finance and Local Government, said:
“The changes to the local tax system form one strand of a wider package of measures being introduced – encompassing the planning, property and taxation systems – to address the impact of second homes and unaffordable housing affecting many communities in Wales. Ultimately, these changes are about fairness. We want to ensure councils have the powers available to them to strike the right balance in local housing supply.”
Designated Member Sian Gwenllian MS said:
“I am glad that so many local authorities in every corner of our country are responding positively to the levers that have been introduced. I would like to thank all those across Wales who have worked hard to move quickly, given the housing and cost of living crises. Ultimately this is matter of fairness for local people and those on lower incomes. The extra finance generated by the new premiums will be put to good use - including improving the availability of affordable homes for those who are currently being priced out of their communities.”
New planning use classes and the ability of local authorities to make local amendments to the planning system, where they have evidence, are now in force.
Proposals for a new statutory licensing scheme for visitor accommodation providers were published for consultation before Christmas, while up to £60m is being allocated to bring empty homes into use as part of a national Empty Homes Scheme.
The commitment to enable increased land transaction tax to be raised on second homes and short term holiday let purchases is also being taken forward, as well as specific action to protect Welsh speaking communities including a voluntary ‘fair chance scheme’ giving sellers the option to only market properties locally for a fixed period. Work is also being progressed on a Property and Fair Rents White Paper.
Julie James, Minister for Climate Change, added:
“The challenges that can be caused by high levels of second home and short-term let ownership are complex, and there is no quick fix solution. The wide range of measures we have introduced – across tax, planning, empty homes and our commitment to statutory licensing – are unequalled as a package in a UK context. It is a reflection of our commitment to help people live affordably in their local communities.”
Notes to editors
The new measures have followed a consultation process including businesses, the tourism industry and local communities.
The maximum level at which local authorities can set council tax premiums on second homes and long-term empty properties has increased to 300% from the 100% maximum available in Wales since 2014. Councils are able to decide the level appropriate for their individual local circumstances, and can set the premium at any level up to the maximum. Different levels can be set for second homes and long-term empty dwellings. Premiums were previously set at a maximum level of 100%, and were paid on more than 23,000 properties in 2022-23.
- Three authorities, Flintshire, Powys and Cardiff have increased the premium charged for long term empty properties in 2023-24.
- Five authorities, Anglesey, Gwynedd, Conwy, Flintshire and Powys have increased the premium charged for second homes in 2023-24.
- Four authorities, Bridgend, Vale of Glamorgan, Rhondda Cynon Taf and Merthyr Tydfil have determined to introduce a premium for long term empty properties for the first time from 1 April 2023. As any determination for second homes must be made 12 months before the premium can be charged, they have also determined to charge a premium for second homes from 1 April 2024.
- Cardiff have determined to charge a premium on second homes from 1 April 2024 for the first time.
- Carmarthenshire and Monmouthshire have determined to introduce premiums for both long term empty properties and second homes from 1 April 2024. Monmouthshire intend charging the maximum 300% to properties that have been empty for more than 3 years and Carmarthenshire 200% to properties empty for more than 5 years.
To assess the effectiveness of the premiums and ensure information on their use is clearly made available to local council taxpayers, the Welsh Government expects local authorities to report on the implementation of the premiums and the additional revenue generated. Local authorities will be encouraged to publish on their website details relating to the income generating from charging a premium for a previous financial year, including numbers of properties, the amount of income generated, and how the additional income raised has been used to tackle the problems caused by long-term empty properties and second homes or to address other local housing issues.
The criteria for holiday lets being liable for non-domestic rates instead of council tax have also changed, with the intention of providing a clearer demonstration that properties are being let regularly as part of genuine holiday accommodation businesses making a substantial contribution to the local economy. Previously, properties that were available to let for at least 140 days, and were actually let for at least 70 days, would pay rates rather than council tax. The change has increased 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.
A national Empty Homes Scheme is being introduced, underpinned by up to £60m in funding. This is to bring a higher proportion of empty homes into common ownership at local level.
Funding totalling more than £13.5m has been approved for Carmarthenshire and Pembrokeshire local authorities to assist them with empty homes purchases and renovations.
The Welsh Language Communities Housing Plan sets out a number of different interventions aimed at safeguarding Welsh-speaking communities - Welsh Language Communities Housing Plan [HTML] | GOV.WALES
The Welsh Government has confirmed its commitment to introducing a statutory licensing scheme, making it a requirement to obtain a licence to operate visitor accommodation, including short-term holiday lets. A consultation on the proposals closed on 17 March.
Three new planning use classes have been introduced – a primary home, a second home and short-term holiday accommodation. Local planning authorities, where they have evidence, will be able to make amendments to the planning system to require planning permission for change of use from one class to another. Changes to national planning policy have also been introduced, which will allow local authorities to better manage the number of second homes and short-term holiday lets in local communities.
An additional class of exception from premiums has been created to ensure properties with a planning condition preventing them from being used as someone’s main home or only allowing their use as a holiday let cannot be liable for a premium. Updated guidance has been provided to local authorities.
Work is being taken forward to develop a national framework so a local authority can request increased land transaction tax rates for second homes and holiday lets to be applied in their local area impacted by second homes and holiday lets. Engagement is underway with local authorities and the Welsh Revenue Authority.
Welsh Government has been exploring the issues that affect local residents in purchasing a home in areas affected by second homes and in particular evaluating the possible solutions to address the key concerns relating to mortgage availability.