5. Will the Minister give an update on Welsh Government plans for second homes taxes? OAQ54333

My officials are continuing to work with local government to review how local authorities are using their discretionary powers to apply council tax premiums. They will consider any evidence provided to aid the review and ensure that the legislation is operating as intended. 

There was a discussion on this subject yesterday, if you remember, and I must say that I was stunned that the First Minister missed the point entirely. The totally unacceptable situation is that there's an anomaly in the system, which means that a great number of second-home owners avoid paying taxes. They don’t pay council tax, and neither do they pay business rates, as they act as a business for a very short period of time in the year. That’s the anomaly that needs to be addressed, and you will know that I have drawn attention to this a number of times, and the Welsh Local Government Association also agrees that there’s a need to do something as a matter of urgency. As you say, your officials are reviewing the situation. I met with them back in June, and they promised that there would be some kind of progress or report made in this field, but I’m still waiting to see what the recommendations will be. This is a scandal and has to be sorted out quickly.

Thank you for raising this, and thank you also for your interest in the issue and for speaking to my officials with your ideas as to how we can start to address this particular matter. It is the case that a business must be able to demonstrate that the property that they're seeking to let as holiday let accommodation, for example, is available for at least 140 days in a 12-month period, and actually let for 70 days. Now, the question there is: have we got the balance right? Is 140 days to be shown as available for letting right, and is 70 days for actually being let—is that right? Does that demonstrate that that property is being used as self-catering accommodation? So, this is another issue that I'll be speaking to the local government finance sub-group about at our next meeting, which I believe is next week, but it's an issue that I'm certainly alive to.

We did ask local authorities to let us know of any cases where they felt that a property was being marketed as self-catering accommodation, but actually not being used in that way. Local authorities did come forward, including Gwynedd, with some examples of properties that they thought fell into that category. The Valuation Office Agency looked at each of the cases and found that they were all were operating within the law, but then there is that question as to whether or not we have it right in terms of the number of days, and I'm certainly keen to look at that.

If these properties are not paying a business rate, they should be paying council tax. That seems to be at the heart of this, and we need to sort something out.

I can assure you that we are having these discussions with local authorities in terms of their experiences of the issue, to what extent this is a problem. It does vary across Wales, I think, in terms of how many second homes there are and how many holiday lets there are, and it's certainly an acute problem in some areas. But it's one that we're really keen to address because, as I said, we've got a piece of work going on looking at the future of council tax, looking at different ways of looking at council tax, to try and make it more progressive, looking at land value taxes, looking at local income taxes—all kinds of different permutations of raising local taxation in future. And, certainly, this is part of it.

I would give a simple answer to you: why don't you end the business rate relief on houses and flats? If you do that, then it wouldn't do any good to them to call them businesses. I can see no good reason for giving business rate relief on houses and flats. If you stopped that, you'd remove the anomaly, and you can do that tomorrow.

I know that there have been consultations on this matter by Welsh Government in the past as to whether particular classes of property should be exempt from small business rates relief. Certainly, that was something that was looked at in depth when we developed the permanent scheme. Removal of rate relief for self-catering properties wasn't considered appropriate and I think, if I recall correctly, that was because of the impact that it might have on the tourism industry, where these properties are particularly important in some areas in terms of keeping the tourism industry alive. There's obviously a really difficult and delicate balance to be addressed.