According to the Welsh Government, they will be bringing in new regulations over how long holiday lets need to be let out for in order to qualify for business rates – rather than paying council tax. They are also giving local authorities the powers to increase the council tax premium to 300% on properties that don’t reach that minimum occupancy. This is part of an effort to tackle rising prices in some rural areas.
As it stands, most holiday lets on the rates system currently have a low enough rateable value that they don’t have to pay anything. This means they could face a large hike if they can’t meet the new criteria, which has sparked an outcry from the sector.
The Welsh Government is also consulting on a new tourism tax, North Wales Live reports, although it would be several years before this would ever be implemented.
Ashford Price, owner of the National Showcaves Centre for Wales and Secretary of the Welsh Association of Visitor Attractions, believes around 1,400 business will go under due to the changes. He also claimed the homes would not be sold locally but instead be picked up by “wealthy English ‘incomers'”.
He compared the proposals – due to come into force in April 2023 – to being reminiscent to the rules of a “Stalinist Regime”. Joseph Stalin ran a brutal dictatorship in the Soviet Union that led to the murder, imprisonment, deportation and starvation of millions of his own people – while Welsh Government are proposing increasing the minimum time properties have to be let out from 70 days to 182.
Mr Price said: “From April 2023 the Welsh Governments ‘utopian’ future for those still left in self-catering in Wales will be like working under rules reminiscent of a ‘Stalinist Regime’ where you are told the number of days your business ‘must’ be open for (252 days.), the number of letting days your business ‘must’ reach (182 days) – which is an unobtainable figure for the majority of operators in Wales, and finally the ‘punishment’ if your business fails to meet any of these new government demands is an increase of up to 300% in your rates bill.
“A leading tourism expert anticipates that around 1,400 business will be forced to close owing to these new rules, and many thousands of Welsh people will be made redundant. Rural areas will also be the poorer as when genuine self-catering operators cease to operate there will be fewer tourists spending money in their area during the tourist season. This ‘summer tourist money’ helps the local shops, garages, and pubs survive the long quiet winters in many rural locations.
“A high number of these lovely self-catering properties will be put up for sale. However, these properties will not be available for most locals to buy as the asking price will be beyond their reach.
“Hence, those in government who are claiming that these new draconian measures being imposed on genuine Welsh self-catering operators will lead to an increase in housing stock for local people are misleading the people of Wales. In many cases what will happen is that these properties will be bought by wealthy English ‘incomers’ who will not mind paying 300% extra on rates for an exquisite piece of Welsh real estate that their families can then use as a ‘holiday home’.
“This is just one example of the unintended consequences that the Welsh Government do not seem to comprehend within their anti-tourism agenda.”
He said the advice to work harder on increasing the number of days a property is let ignores the seasonal nature of tourism in many parts of Wales. He added: “Holidaymakers in Britain seeking a winter break require two things – guaranteed sunshine and an inexpensive holiday. Wales on average has 60 days of sunshine a year whereas Spain and the Canaries have 300 days of sunshine. Wales simply cannot compete on the ‘weather front’ in winter.
“Winter opening for many in Wales, especially in rural areas, is simply not a viable option as the demand is not there in the first place and anyway everything locally closes down. Currently we also have a cost of living crisis in Britain which we are told will get worse this winter. This means that many people will not be able to afford a summer holiday in 2023 let alone a winter one.
“To say that the future looks bleak for many genuine Welsh self-catering operators is an understatement, as there will be no future for many of the 4,700 people currently employed within the Welsh self-catering sector from April 2023.”
Welsh Government finance minister Rebecca Evans said: “I recognise the strength of feeling among self-catering operators and have listened to the representations from individual businesses and industry representative bodies. There is limited evidence available in relation to some of these considerations and I am grateful to the sector for providing additional information they have gathered from their members.
“This has been taken into account in completing the Explanatory Memorandum and Regulatory Impact Assessment, which makes use of the available evidence. I recognise that the stronger criteria may be challenging for some operators to meet. The purpose of the change is to help ensure property owners are making a fair contribution to local communities, for example by increasing their contribution to the local economy through greater letting activity or by paying council tax on their properties.”