New powers for local authorities to address impact of second and empty homes come into force

Welsh communities will be better supported to address high levels of second home ownership and empty properties as new local tax rules come into force today.

It marks another milestone in the implementation of a series of measures being introduced as part of the Welsh Government’s Co-operation Agreement commitment with Plaid Cymru to address the impact of second homes and empty homes on communities across the nation.

The rules have become operational following national and local consultations, meaning that local authorities are now able to put their strengthened levers into practical effect.

Measures are part of efforts to ensure everyone has the chance to live in their local community and to improve the availability and affordability of housing to rent and to buy for those on local incomes.

Local authorities are now able to set and collect council tax premiums on second homes and long-term empty properties at up to 300% – up from 100% – with councils able to decide levels based on their local needs.

Five councils have increased the premium charged for second homes in 2023-24, with another seven set to introduce one from April 2024.

Three councils have increased the long-term empty property premium in 2023-24, with another four introducing one for the first time, and another two planning to introduce one in April 2024.

The criteria for holiday lets being liable for non-domestic rates instead of council tax have also been strengthened, with the intention of providing a clearer demonstration that properties are being let regularly as part of genuine holiday accommodation businesses making a substantial contribution to the local economy.

To accompany this change revised statutory guidance has been issued to local authorities, and a commitment to introduce further exceptions to the regulations in the Senedd fulfilled.

Rebecca Evans, Minister for Finance and Local Government, said:

“The changes to the local tax system form one strand of a wider package of measures being introduced – encompassing the planning, property and taxation systems – to address the impact of second homes and unaffordable housing affecting many communities in Wales. Ultimately, these changes are about fairness. We want to ensure councils have the powers available to them to strike the right balance in local housing supply.”

Designated Member Sian Gwenllian MS said:

“I am glad that so many local authorities in every corner of our country are responding positively to the levers that have been introduced. I would like to thank all those across Wales who have worked hard to move quickly, given the housing and cost of living crises. Ultimately this is matter of fairness for local people and those on lower incomes. The extra finance generated by the new premiums will be put to good use – including improving the availability of affordable homes for those who are currently being priced out of their communities.”

New planning use classes and the ability of local authorities to make local amendments to the planning system, where they have evidence, are now in force.

Proposals for a new statutory licensing scheme for visitor accommodation providers were published for consultation before Christmas, while up to £60m is being allocated to bring empty homes into use as part of a national Empty Homes Scheme.

The commitment to enable increased land transaction tax to be raised on second homes and short term holiday let purchases is also being taken forward, as well as specific action to protect Welsh speaking communities including a voluntary ‘fair chance scheme’ giving sellers the option to only market properties locally for a fixed period. Work is also being progressed on a Property and Fair Rents White Paper.

Julie James, Minister for Climate Change, added:

“The challenges that can be caused by high levels of second home and short-term let ownership are complex, and there is no quick fix solution. The wide range of measures we have introduced – across tax, planning, empty homes and our commitment to statutory licensing – are unequalled as a package in a UK context. It is a reflection of our commitment to help people live affordably in their local communities.”

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