WQ86055 (e) Member declared an interest Tabled on 20/09/2022

What assessment has the Welsh Government undertaken to identify how many properties are expected to become available for purchase or to re-enter the residential letting market following the introduction of the Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2022?

Answered by Minister for Finance and Local Government | Answered on 26/09/2022

As a result of the Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2022 (‘the 2022 Order’), a number of possible behavioural changes may occur. These could include property owners adapting their operating models to make greater use of their properties so that they meet the increased letting criteria and may be classified as non-domestic for local tax purposes.

Where this is not desirable or achievable, owners may choose to adapt their operating models to account for council tax liability. Some owners may choose to sell their properties, or to let them out as permanent domestic accommodation for the local community. Others may choose to occupy the property as their primary home or to adopt another option.

There is limited evidence to enable an assessment of the potential impact of the increase in letting requirements on the subsequent numbers of self-catering accommodation businesses that may become liable for council tax. The Explanatory Memorandum and Regulatory Impact Assessment makes use of the available evidence and has been published alongside the legislation.

Increasing the letting criteria is likely to result in some properties becoming liable for council tax, rather than non-domestic rates. It is not possible to predict how many properties might be affected in this way, given the range of possible behavioural changes that could occur.

The Welsh Government does not hold data on the number of properties that might re-enter the residential market.

The Welsh Government does not hold sufficient data to accurately assess the impact of the legislation on the number of self-catering businesses and related employment.

The intention of the policy change effected in the 2022 Order is to address a particular aspect of the issues presented by second homes and self-catering accommodation, to ensure properties make a fair contribution towards their local community, either through local taxes or through supporting the local economy. The changes to the local taxes should be viewed as part of a wider programme of measures within the Welsh Government’s three-pronged approach to addressing the impact which large numbers of second homes and holiday lets can have on communities and to improving access to affordable housing.

This work is being carried out in collaboration with Siân Gwenllian MS, the Plaid Cymru designated lead member, as part of the Co-operation Agreement between the Welsh Government and Plaid Cymru.