The Welsh government will look at whether tax rules for holiday homes should be relaxed after a backlash from owners. Finance Minister Elin Jones said the review will examine a "modest" reduction to the 182-day business rate threshold for self-catering accommodation, alongside possible new exemptions.
Why are the rules being reviewed?
The changes were introduced as part of efforts to preserve housing for local people. Property owners pay higher council tax if properties are not let for at least 182 days a year, and the government now wants to assess the impact of changing that threshold.
Jones also said she wanted more "clear and reasonable exemptions" to the rule. A government consultation will look at "whether the 182-day threshold is set at the right level and what impact a modest reduction might have".
It also proposes five new possible exemptions for accommodation that cannot be used as permanent homes, including properties on owners' farms.
What has changed for self-catering accommodation?
The current Welsh system, which has been in place since April 2023, requires properties to be available for at least 252 days and actually let for an average of 182 days over a two or three-year period. If they fail to meet that test, they can be classed as second homes and liable for council tax, which in some counties includes an additional premium.
In Gwynedd, for example, second-home owners pay the standard council tax rate, plus an extra 150%.
Previously, properties had to be available for 140 days of the year and actually let for 70 to qualify for business rates - a system that still exists in England.
How have owners and parties reacted?
The Professional Association of Self Caterers (PASC) welcomed the review, calling it a chance to "reconsider one of the most damaging policies to affect Welsh tourism businesses in recent times".
"reconsider one of the most damaging policies to affect Welsh tourism businesses in recent times"
PASC said the occupancy levels being considered by ministers could still be too high. Nicky Williamson, the association's Welsh policy adviser, urged "every operator to explain how the current rules affect their business and why a realistic threshold is essential if Welsh tourism is to remain competitive".
"every operator to explain how the current rules affect their business and why a realistic threshold is essential if Welsh tourism is to remain competitive"
She added:
"Our objective has never been to remove the distinction between genuine holiday businesses and second homes,"and said:
"It is to ensure that viable tourism businesses are not penalised by an occupancy requirement that many simply cannot achieve."
Reform UK said it was unclear whether a "modest reduction" in the threshold would provide meaningful support for the tourism sector. Reform UK Wales said the tourism industry needed more detail on what the proposal would mean in practice and whether it would provide meaningful support for the sector.
Shadow minister Louise Emery said:
"Plaid Cymru's proposals of more exemptions could mean more bureaucracy."She added:
"Rather than just tinkering around the edges, a more ambitious plan to reduce the threshold needs implementing."
What has Plaid Cymru said?
Plaid Cymru said in its election manifesto it would review the 182-day rule. The policy has been in place since April 2023 and was one of the measures introduced to tackle second homes under the Labour-Plaid co-operation agreement in the last Senedd.
The party said it would examine the rule as part of its wider approach to housing and tourism, and the consultation now announced by the Welsh government will test how any changes might affect businesses, local authorities and local areas.
Jones said:
"I have heard representations from a number of businesses that are making meaningful contributions to their local economies but are unable to meet the current threshold."
She continued:
"This consultation will help us find a solution that works better for everyone, including businesses, local authorities and local areas."
Jones added:
"I am committed to getting the balance right - keeping homes in our communities while giving tourism the support it needs to thrive."
How does the rule compare with England?
The Welsh rules are stricter than the system in England, where the previous 140-day availability requirement and 70-day letting rule still apply for business rates. In Wales, the higher threshold was introduced to help ensure homes remain available to local residents and to reduce the number of properties being used as second homes.
The government consultation will now test whether that balance should shift, including whether exemptions are needed for some accommodation that cannot function as permanent housing.
Key Facts
- Property owners in Wales pay higher council tax if self-catering accommodation is not let for at least 182 days a year.
- The Welsh government will examine a "modest" reduction to the threshold and five possible new exemptions.
- The current rules have applied since April 2023 and were introduced under the Labour-Plaid co-operation agreement.
- In Gwynedd, second-home owners pay council tax plus an extra 150%.
- PASC, Reform UK and Plaid Cymru have all responded to the review.
