Holiday let businesses face uncertainty due to changes in tax regulations. Montgomeryshire MS Russell George MS has raised concerns with Finance Secretary Mark Drakeford MS in the Senedd this week.
Under rules brought in 2023, self-catering properties must be let for at least 182 days per year to qualify for business rates. If a business fails to meet the threshold, they risk being moved onto the premium second home council tax, significantly increasing their costs.
Self-caterers argue that in many areas of Wales, the market does not allow for 182 days of bookings, even in peak years. Furthermore, a substantial proportion of holiday-lets face planning restrictions that prevent them from being used for other purposes, such as being converted into permanent homes. For many operators who are often small family businesses running converted barns or properties with shared utilities, meeting the requirement is simply impossible.
During a Senedd session this week, Finance Secretary Mark Drakeford MS, highlighted that 60 per cent of holiday lets have already met the new criteria. However, Montgomeryshire MS Russell George raised concerns that the statistics hide serious challenges facing a significant portion of the sector.
Mr George shared evidence from the Professional Association of Self-Caterers UK, showing that 33 per cent of holiday lets in Wales are legally restricted from being used as general housing stock. He warned that forcing such businesses into the council tax system threatens their viability and risks undermining an important part of Wales’s rural and tourism economy.
He also questioned whether the Welsh Government would extend a current consultation to fully address the concerns of operators caught in this situation. Mr Drakeford said that he would welcome any responses to the current consultation with suggestions on how the policy can be improved.
People can respond to the Welsh Governments consultation by visiting https://www.gov.wales/proposed-refinements-classification-self-catering-properties-local-tax-purposes.
Speaking after raising the issue in the Senedd, Russell George MS said:
"I fully recognise the Welsh Government’s intention to tackle housing pressures, but these rules are punishing genuine small businesses that can never realistically meet the 182-day threshold.
‘’Many of these properties cannot be used as permanent homes due to planning restrictions, and they are being treated unfairly.
‘’What I am calling for is a fair and balanced system, one that supports legitimate tourism businesses that play such a vital role in our local economy.
‘’Originally the Welsh Governments consultation was only looking at two small changes, however I am pleased that the Finance Secretary said that he would welcome wider responses to the consultation. I would urge Self-catering businesses to respond to the consultation."