The proposal, outlined in a 12-week consultation, is to shorten the number of days a holiday let property must be available to rent and be booked by guests to be eligible for business rates. The threshold currently states that a holiday let in Wales must be available to rent for at least 252 days a year and booked for at least 182 days to qualify for business rates, rather than council tax.
This rule has been in place since April 2023, following concerns that second homeowners were bypassing their council tax liability.
This was also in response to a trebling of the number of properties listed for non-domestic rates to more than 11,000 over a decade, suggesting this limited availability housing stock was not fully contributing to the local economy.
The government said since the threshold for letting was increased, around 8,000 self-catering properties were listed for non-domestic rates, a reduction of around 3,000.
It has since considered the impact of the higher threshold on “genuine self-catering businesses”, suggesting that while some did not achieve 182 days of letting, they were let for nearly half the year and still made a “significant contribution” to the local economy.
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The Welsh government has not said what the threshold would be lowered to but floated the idea of a four-week reduction. Further, exemptions could apply to certain properties such as property on the owner’s farm and large multi-unit properties.
A welcome boost for genuine holiday let businesses
Phil Schofield, head of marketing at specialist holiday home insurance provider Schofields, said the rules had been criticised by holiday let owners, particularly those in seasonal and rural areas where demand fluctuated.
Schofield said as demand changed throughout the year, holiday let owners felt “under constant pressure to secure bookings, even during periods when visitor demand is traditionally low”.
If implemented, Schofield said this “could provide a welcome boost for many genuine holiday let businesses that have struggled to meet the current requirements through no fault of their own”.
With some owners facing higher council tax charges with premiums up to 300% in some areas, Schofield said this was “the difference between running a sustainable business and facing a significant additional tax bill”.
He added: “The rules were introduced to distinguish genuine holiday let businesses from second homes. However, many operators argue the current thresholds don’t reflect the realities of tourism, particularly in seasonal destinations.
“The fact that ministers are reviewing the policy is encouraging. It suggests there’s growing recognition that a one-size-fits-all approach doesn’t always reflect the realities of running a genuine holiday let business in seasonal destinations.”
