2. Will the First Minister make a statement on the impact of registering second homes as business properties on council tax receipts? OAQ52931

It is the responsibility of the Valuation Office Agency, independently of the Welsh Government, to determine whether each property in Wales is liable for council tax or for non-domestic rates, and these decisions are made according to criteria set out in law.

The impact of the second-homes market and holiday homes is well known, in terms of young people’s ability to get on the property ladder locally. It pushes prices up and pushes people out of the housing market. We know the gravity of the problem—36 homes sold in Anglesey in 2017-18 were second homes or buy-to-lets. The figures are even higher in Gwynedd, and that’s very concerning indeed. I’m very supportive of measures such as charging more council tax on second homes as a way of making people think twice or to bring more funds into local authority coffers. But there is a pattern emerging now, where more and more people, rather than paying council tax on their homes, are registering them as business properties so that they would then have to pay business rates. But, as small businesses, they receive full business rate relief, and that is expensive for local authorities. Does the First Minister agree with me that this is a loophole that needs to be closed, and what is the Government considering doing in order to close that loophole?

I don’t think there’s a loophole, but the law is very clear—it’s stronger than in England. It is a matter, of course, for the Valuation Office Agency, but if somebody wants to change their status, where they change from paying the council tax to paying business non-domestic rates, they have to show evidence that that is correct. They can’t just state that; they have to provide evidence. If that evidence is weak, or the evidence isn’t sufficient, the Valuation Office Agency can reconsider what they’ve done, and then, of course, they can give them a bill that could go back years regarding paying the council tax. So, ensuring that the law is considered is the point here, and I think the law is clear enough, but it's up to the Valuation Office Agency to police the situation.

Well, you refer to the criteria that the Valuation Office Agency must adjudicate, where, in Wales, property is judged to be a business property and not liable for business rates if it's available for letting commercially as self-catering accommodation for 140 or more days in the following 12 months, has been in the previous 12 months, and has actually been commercially let for at least 70 days during that period. What assurance can you therefore provide the many providers, from Flintshire to Anglesey, who have contacted me, who run legitimate self-catering business, many of whom are farms that have diversified, that their genuine and legitimate businesses will not be compromised by any changes that might come?

Well, genuine businesses need not fear, of course. What I can say is that the Cabinet Secretary for Finance is evaluating the impact of the introduction of council tax premiums. That does include a survey of local authorities, to assess how many properties have switched from council tax to non-domestic rates. Once that survey is complete, we can then see what the scale of the problem is, and whether there is a need to do more to ensure that people pay properly, according to the status of the property that they own.

Will the Welsh Government legislate to ensure that all properties built or adapted for housing have to pay council tax based upon the band they're in and any second home premium charged by the local authority, or that the business rate relief for rented out properties is abolished? Because I think this is a loophole: it has to be available for 140 days; it is quite easy to make something available for 140 days, and get round it. It has to be let out for 70 days, whether renting out to family counts, which a lot of people do, in that you collect more rent, but they let family members use it, and therefore that builds up to the 70 days. So, will the Government look at taking either of those two actions, to ensure that local authorities get the money they deserve?

We've legislated to allow local authorities to charge council tax premiums on second homes. As I said in the answer earlier, it's the responsibility of the Valuation Office Agency—independently of the Government—to determine the status of each property in Wales. As I said, those second home owners who try to game the system could find themselves facing very large backdated bills for council tax. But, again, I refer to the answer I gave earlier, where a review is being conducted, to examine the scale of the problem in different parts of Wales.