3. Will the Minister make a statement on the steps available to local government to prevent second homes being registered as businesses? OAQ55010

If a property is a second home, it is classified as a domestic dwelling. The registration of businesses is not in itself devolved.

I was in Rhosneigr at a coffee morning recently, and a group of ladies who were busy making me a cuppa at the time said, 'Can we have a public meeting to discuss the red bins issue?' I wasn't sure what they meant, so they explained: 'Oh, you know, when people register their holiday homes as businesses, they have their domestic bins changed for business ones, red ones. There are more and more of them in the village, and it's wrong, they're not paying their taxes.'

Now, in November 2018, the former First Minister told me that he didn't believe there was a loophole here. The finance Minister, Rebecca Evans, also said, 'I'm not sure that I would agree that there's a loophole in the law'. Let's have a look at definitions of 'loophole'. The Cambridge dictionary says:

'loophole: a small mistake in an agreement or law that gives someone the chance to avoid having to do something'.

The Collins dictionary says:

'A loophole in the law is a small mistake which allows people to do something that would otherwise be illegal.'

And that's the point here. Certainly, it should be illegal to buy a second home and then be able to avoid paying the taxes that other full-time citizens of that same community do have to pay, and still expect to receive the same services. What the red bins story tells us is that this is becoming more and more visible and that people are getting angrier and angrier about it. 

Now, if Government won't agree that there is a loophole here, will you agree that there is a small mistake in legislation currently that has consequences that may well be unintended, but that has to be addressed in the name of fairness and in the name of providing local authorities much-needed revenue that is otherwise lost?

So, I take the point the Member is trying to make, but I don't think it is a loophole within any of the definitions you've just said, and that's because it's intended. A loophole is an unintended consequence, and actually this is an intended consequence.

Just to be clear how it works, because I think there's a great deal of misunderstanding amongst people about how exactly this works: so, when somebody acquires a property, they have to class it as a dwelling or as a business. If they class it as a dwelling, then it's a second home if it's not occupied all the time, and then it's subject to the council tax system prevalent in that authority.

Some authorities have doubled the council tax on second homes, others have actually halved it, depending on their local circumstances and what they're trying to achieve. That's a matter for local discretion and they can do what they like.

What you're describing is when someone acquires a property and then says it's not a domestic property, it's actually part of a business and they're letting it out as self-catering or whatever. There are strict rules about what they have to do to do that, and they have to apply through the valuation office, they must complete the forms and provide documentary evidence the property met the letting criteria, and the Valuation Office Agency reviews the evidence before making a change to the lists, and then it's a registered business. Only two properties are allowed per registered business to count as a small business. So, if you're a small business, you can't have more than two properties. And if you're a small business with two properties, you can apply for small business rate relief.

A holiday home.

Well, a holiday home is the same thing—it's still a business, whatever you call it.

No, it's not—[Inaudible.]

The Minister is seeking to provide you with an answer, Rhun ap Iorwerth.

So, if it's not being let out and it is classed as a small business, and what you're saying is, 'This is not being let out, it's being used as a second home', and the person has done that—that's a fraud. So, that's a criminal offence and would be prosecuted. We have asked—as a result of something Siân Gwenllian asked me to do—all authorities in Wales for any evidence of that, and we have not been provided with any. And we've asked the valuation office to conduct an audit of the ones that they're aware of, and they have not come up with a single one that hasn't legitimately changed across and hasn't been able to provide the evidence necessary to sustain that.

Now, I'll say it again: if you've got evidence that that's happening, let's have it, and I'll do something about it. But so far, at this point in time, we have no—. We have anecdotes of all sorts, including in my own authority and everywhere else, but we have no actual evidence at all that that's actually happening.

I do recognise the concerns behind this question, but the boundaries between main home, second homes, multiple occupation properties and any business identity have become long blurred since the arrival of Airbnb and other similar daily-rate accommodation companies. If you support the principle of what Plaid thinks of as a second home—which is occupied only periodically by visitors who don't live there full time—being excluded from business registration, then how could you ever expect to collect any tourism tax from them? I think, actually, that's a really good reason for not even considering that tax any further.

So, I make the same point: if we have any evidence at all that properties have been incorrectly listed as businesses and not domestic properties, then let's have it, and we'll look at it and do something about it. If a residence is a domestic residence, listed as a domestic residence for occasional occupation, or never occupation—and there's nothing to stop you buying a second home and literally never going to it—as long as it's registered as a domestic premises, then it will pay whatever the relevant council tax for a non-main-home residence is in that area.

You have to positively approach the valuation office and say that you want to register this property as a non-residential property for business use in order to get into this scheme. You have to have two or less of those properties to qualify as a small business and get the rate relief. If you have more than that, you'll be paying non-domestic rates on it instead of council tax, which is not necessarily better, it might be more.

And then the other thing to say is, although the doubling of the charge for second homes in many areas of Wales was not intended in any way as a revenue-raising arrangement—but rather a behaviour modification arrangement—in fact, it's raised very considerable amounts of money across Wales. Far more than ever would have been lost if such a loophole had existed, which I emphasise it does not.

Does the Minister share my frustration that it's not clear whether Plaid are complaining about fraud or are complaining about the law? Is the issue that second-home owners are reclassifying them as holiday homes but still living in them themselves part time and not renting them out? In which case that's fraud. Is it that they're not renting them out very much and they're not actually reaching the 10 weeks a year? In which case shall we have some more enforcement? Or is there an argument that, if they're to benefit from having this zero council tax in this way, they should actually be renting them out for longer than 10 weeks a year? In which case why don't we go to the HMRC definition of requiring furnished holiday lettings to be rented out for 15 weeks a year minimum, and available for 30 weeks a year minimum?

That's a reasonable analysis. Our analysis from all of the work that we've done on this is that the amount of letting is the right level, because tourism economies are very important across Wales in very small places. So, this is a balance, isn't it, between allowing properties to be used in our very vital tourism industry, and making sure that people are not taking advantage of some loophole. But it's not a loophole if you have to evidence it in the right way. So, if you have evidence that people are not letting their accommodation out in the right way, then let us have it. I've said repeatedly in the Chamber, and I'll say it one more time: I am more than happy to look at any evidence at all that that is happening, but currently I don't have any.