Wales’ Tourism Sector Braces for Potential Collapse as Holiday Let Owners Struggle with Crushing 182-Day Council Tax Rule: You Need to Know

Wales’ tourism sector is facing significant challenges as holiday let owners struggle with the new 182-day council tax rule, which requires properties to be available for 252 days a year, with 182 days rented out, to qualify for business rates instead of council tax. Many owners, especially in popular tourist areas, are finding this target unrealistic, leading to financial strain and, in some cases, health problems. Some have even been forced to consider selling their properties due to the overwhelming pressure.

The rule, intended to reduce second homes and increase housing availability for locals, is being seen as a major threat to the tourism industry. In areas like Gwynedd, owners face a 150% council tax premium if they fail to meet the rental criteria, exacerbating their financial difficulties. While the Welsh government has proposed minor adjustments, such as averaging the 182 days over three years, critics argue these changes don’t go far enough to relieve the pressure on operators.

If the current situation persists, widespread business closures may follow, leaving Wales’ tourism sector in jeopardy. Calls to reduce the 182-day requirement are growing louder, as the industry faces the risk of lasting damage.

However, this adjustment has been criticized for being difficult to meet, leading some owners to consider selling their properties. The Professional Association of Self Caterers (PASC) has argued that the 182-day requirement is unreasonably high and is driving owners out of business. The Welsh government, which had initially promised only minor adjustments to the rules, has acknowledged the strong reactions to the changes but maintains that 60% of self-catering businesses have met the target.

Before these changes, properties that were available for rent for at least 140 days a year, with 70 of those days actually booked, were eligible for lower business rates instead of council tax. This system is still in place in England. In Wales, however, properties must now be available for 252 days and let for 182 days. Properties failing to meet these criteria could be classified as second homes and subject to council tax, which in certain areas, such as Gwynedd, includes a significant premium. Second-home owners in Gwynedd face a council tax rate that is 150% higher than the standard rate.

The new 182-day rule has been described by some as an existential threat to the Welsh tourism industry. One business owner, who runs multiple holiday lets, shared their experience of the stress involved in meeting the new requirement, stating that achieving the 182-night threshold had resulted in health problems. This owner emphasized the difficulty of maintaining constant bookings and the pressure of trying to meet such high expectations. They warned that if the situation doesn’t improve, they might have to sell their properties and exit the tourism industry.

In response, the Welsh government proposed minor changes, including the ability to average the 182 days over three years. Under these changes, if an operator misses the 182-day target in one year by a narrow margin, they could avoid paying higher premiums as long as they meet the target over a three-year period. The government also suggested that businesses could give away 14 nights per year to charity, with those nights counting as rental days. Furthermore, local authorities would be encouraged to support self-catering businesses by allowing them to pay the standard council tax rate for one year before higher premiums apply.

Despite these proposed adjustments, the PASC has criticized the idea of giving away nights for charity as unfeasible for many operators. The organization also argued that averaging the 182 days over three years would create additional stress for operators, who could face penalties if they fall short in subsequent years. The PASC has called for a reduction in the 182-day requirement and is urging political parties to include this in their election platforms.

Several political parties in Wales have voiced their positions on the matter. Plaid Cymru has advocated for a more balanced approach to the 182-day rule, suggesting that certain properties should not be classified as full-time residences. The Welsh Conservative Party has proposed reducing the threshold to 105 days, aligning it with the HMRC definition of self-catering accommodation. Reform UK Wales has called for the elimination of both the “tourist tax” and the 182-day rule.

Wales’ tourism sector is at risk of collapse as holiday let owners struggle to meet the crushing 182-day council tax rule, facing financial strain and the threat of business closures. The new regulation is proving unachievable for many, leaving the future of the industry in jeopardy.

In a recent statement, Welsh Labour’s finance secretary acknowledged the concerns raised by the industry but reaffirmed the government’s position, arguing that a property should be let for the majority of the year to be classified as non-domestic for local tax purposes.

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