In March of this year, the Welsh government announced substantial new rules aimed at tackling the rising housing crisis and targeting the number of second homes in rural Welsh communities.
The main way that they plan to do this is by allowing the maximum level that local authorities can set council tax premiums on second homes and long-term empty properties to be increased to 300%. This new rule will come into effect from April 2023.
More than 23,000 properties in Wales this year paid the current premium, which have been capped at 100%. So, what do the tax hikes mean for the housing crisis? And how will it affect house-buying in the future?
Looking for a quick answer? Check out our drop-down menu below!
- What Is The Housing Crisis?
- What Do The New Tax Hikes Mean?
- Love Island Backlash
- What Does This Mean For The Future?
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What Is The Housing Crisis?
The housing crisis refers to the cost of living in Wales being made worse by an influx of people buying second homes or holiday homes, renting them out on Airbnb, and causing prices in the area to rise. This in turn has a knock-on effect on the residents of these villages where the homes are located as it means people can no longer afford rent or to be able to get on the property ladder.
Mark Drakeford, a First Minister, said that there are “too many second homes” in some parts of Wales that are affecting the communities and are having a serious effect on house prices.
There are fears that people may return to the house burnings of the 70s and 80s during the Meibion Glyndwr campaign. During this time, holiday and second homes were burnt to the ground in protest. However, Cllr Craig ab Iago, a councillor and a housing portfolio holder, says that this is not the answer.
“We need homes, not our homes being burnt down and people ending up in jail. That is where we are at now but torching houses is not the answer. We can bring hope back rather than people getting angry. We can’t give up or turn violent and racist, we need to avoid that” says Cllr Craig ab Iago.
What Do The New Tax Hikes Mean?
Whilst the current premium is capped at 100%, under the new rules individual councils will get to decide which level of council tax is appropriate for their local constituency. Hopefully, this new tax hike will mean that second homes and holiday homes are seen as less of a viable business option and will mean that house prices in the area start to come down.
Gwynedd council has decided to tackle the housing crisis with a five-year plan that will cost £77 million and will use around £14 million raised from the second home premium towards this. Plans were drawn up for the council to build more affordable housing.
This new initiative was launched in April last year and has since seen 89 social houses built and 41 empty properties bought back into use as well as 38 units for the homeless have been built or were in the process of being built.
These new measures should help to reduce house prices across Wales and ease the housing crisis.
Love Island Backlash
Like many areas across North Wales, Pembrokeshire is being faced with a particularly fierce housing crisis. The prices of homes are so expensive that first-time buyers can’t afford to get their foot on the ladder whilst people buy second homes in the area and further drive up the price.
Dr. Alex George is the latest to bear the brunt of the criticism, with many branding his decision to buy four-holiday homes in Pembrokeshire ‘disgraceful’. The Love Island star bought four-holiday homes earlier this year with the plan to renovate them and rent three of them out to visiting families whilst using the fourth for a Ukrainian family to live in.
However, this move has been met with severe backlash from locals as they claim that Dr. Alex is feeding into the problem.
Dr Alex defended his purchase by saying “If (I will not be pushing anyone out of the door) and when the refugees wanted to leave, I will invite a local to rent out a suitable flat. I would happily meet with local leaders to discuss housing in Pembrokeshire and see how I can support.”
What Does This Mean For The Future?
With this new 300% cap, it means that local councils will be able to decide the rate of council tax for second and holiday homes at their discretion. According to Ian Wyn-Jones, an estate agent based in Bangor in Gwynedd, there had been a rise in second-home sales in preparation for the changes coming into play next April.
“What we are seeing here in North Wales is that there’s a lot of properties coming on the market where they wouldn’t have a year ago. So, people are planning ahead with this obvious increase by the Welsh Government, which is a good thing but also it could be a bad thing as well for the whole economy” said Mr Wyn-Jones.
Gwynedd Council have unveiled further plans that they are going to put into action in the coming months. These plans include:
- The council aims to build 100 houses with another 100 bought that will then be made available to let to local residents.
- Approximately 300 empty property owners have been sent letters across the county to discuss the possibility of selling to the council. However, only seven positive responses have been received and out of those seven, only one was suitable to buy.
- Land is currently looking at being considered for development.
This covers everything you need to know about the new hike in council tax prices for second homes in Wales. If you have any questions, queries, or insight into the topic, get in touch!
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Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
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