Second homes: Wales' tax policy 'harming genuine holiday let businesses' expert warns

A couple who run a holiday let in Carmarthenshire warn the Welsh Government's second home policy has created the "perfect storm" with small businesses at its centre.

Sue and Jonah MacGill decided to convert a 1700s stone cottage in Llandovery into a self-catering holiday let in 2003.

They hoped it would give them an income after retiring from the military and the NHS.

But Mr MacGill said the housing policies introduced by the Welsh Government in April 2023 are "a blanket, one size fits all strategy", with bills rocketing.

The Welsh Government hopes to tackle the housing crisis in areas with high rates of second home ownership.

Holiday let businesses must now be let out for 182 days a year, or six months, to qualify for business tax.

If not, it could be classed as a second home meaning the owners could pay a council tax premium - up to 300% in some parts of Wales.

Even though both Mr and Mrs MacGill are just making the 182 day target, they say this policy is adding "enormous strain".

With rising bills and the cost of living impacting people's holiday plans, the couple are living in "constant stress".

Mr MacGill said: "Closure is a concern. If we realise we’re going to fall short of the 182 target, we’d have to claw back the money somewhere to make savings.

"We feel we’re being targeted, almost discrimination against. You know it’s a one size fits all solution. It's a blanket strategy in order to challenge the housing problems we’ve got."

Around 3,000 self-catering businesses in Wales have been adjusting to the policy changes.

Jonah and Sue say the 182 day target is a 'real concern'. Credit: ITV Cymru Wales

Alistair Handyside, chair of the Professional Association of Self Caterers, spends his time supporting holiday let business owners with their mental health.

"It's a massive stress point. You wouldn’t say to a pub that they need to sell a certain number of pints or for hotels to book a certain number of rooms," Mr Handyside said.

He continued: "It's an artificial measure which most Welsh businesses in self catering cannot meet.

"We understand the Welsh Government has objectives but don't harm genuine Welsh businesses. This particular measure is the most harmful of them all."

Mr Handyside added that a simple solution would be to lower the 182 day target to something more reasonable. 105 days was recommended by HMRC.

A spokesperson for the Welsh Government said: "Wales has so much to offer to visitors and we want to ensure that we realise that potential in a way that achieves a sustainable balance between our communities, businesses, landscapes and visitors.

“We are taking radical action using the planning, property and taxation systems available to us to achieve this, as part of a joined-up package of solutions to a complex set of issues.

“We will continue to engage with the industry to help inform our approach.”

In the UK Government's budget announcement on 6 March, Chancellor Jeremy Hunt said he will be abolishing tax breaks for second home owners.

These tax breaks have been making it more profitable for second home owners to let out their properties to holidaymakers instead of long-term tenants.

Mr Hunt said this tougher approach, similar to the approach already in place in Wales, will ease the housing crisis in parts of the UK where locals have been priced out of their local areas.

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