MS, Cabinet Secretary for
Finance and Welsh Language: Today, I am launching a consultation
about the Welsh Government's proposals to refine the way in which
the criteria used to classify self-catering properties for local
tax purposes are applied.
Properties that are let out as self-catering accommodation are
classified as domestic and liable for council tax, unless they
meet certain criteria for non-domestic classification, related to
their commercial letting activity. Since 1 April 2023, those
criteria have included requirements that the property was
available to let for at least 252 days and actually let for at
least 182 days over the previous year.
The primary aim of this policy change was to ensure property
owners are making a fair contribution and to maximise the use of
property, to the benefit of local communities. This could include
benefits arising from increased occupancy for short-term letting
or the release of some properties for sale or rent as permanent
homes for local people. Local taxation changes form part of the
Welsh Government's three-pronged approach to tackling the impact
that large numbers of second homes and self-catering properties
can have on communities and the Welsh language in some parts of
Wales.
I can confirm that, following implementation, 60% of
self-catering properties have met the new letting criteria. This
exceeds the levels predicted by the self-catering sector and
historical occupancy estimates available when the changes were
introduced. Many properties in all parts of Wales have met the
new letting criteria, demonstrating that this is achievable where
supply does not exceed demand. The increased lettings achieved by
many operators will support the benefits to local communities
intended by the policy change. The Welsh Government remains of
the view that, for a property to be classified as non-domestic
for local tax purposes, it should operate as a business for the
majority of the year.
All self-catering properties now classified as non-domestic have
met the new letting criteria. It is, therefore, timely to
consider whether any refinements to their treatment for local tax
purposes should be adopted, to support stability. The Welsh
Government is proposing to make two specific changes to the way
the letting criteria are applied in assessments for non-domestic
classification.
Firstly, we are proposing to enable an average of days let over
multiple years to be taken as evidence of compliance, where 182
days are not achieved in the previous year. This would provide an
opportunity for operators whose compliance lapses by a narrow
margin to potentially achieve 182 days letting again, before they
would otherwise become liable for council tax.
Secondly, we are proposing to enable an allowance of up to 14
days per year for donations to charity of short breaks to count
towards the letting criteria. This would be intended to ensure
any such donations are not disincentivised and support the wider
public benefit they provide.
Subject to the outcome of the consultation, legislation would be
required to implement these proposals. Any legislative changes
would be intended to take effect on 1 April 2026.
Where self-catering properties do not meet the letting criteria
they are liable for council tax, which may include a premium. The
powers to charge council tax premiums are flexible, enabling
local authorities to develop tailored policies. For example, one
local authority has created a local exception from the council
tax premium, allowing self-catering properties a 12-month grace
period paying only the standard rate of council tax following a
move from non-domestic to domestic classification. The
consultation also seeks views on the Welsh Government's intention
to encourage other local authorities to consider similar policies
which would support self-catering operators with a stepped
transition to council tax.
The Welsh Government's proposals respond, in the manner
considered appropriate, to matters raised by the self-catering
sector during implementation of the new letting criteria. The
consultation sets out the proposals in detail and asks for views.
It will run for 12 weeks from 28 August to 20 November
2025.
The consultation is available at: Proposed refinements to
the classification of self-catering properties for local tax
purposes | GOV.WALES
This statement is being issued during recess to keep Members
informed. Should Members wish me to make a further statement or
to answer questions on this when the Senedd returns I would be
happy to do so.
