Changes to Holiday Let Regulations in Wales: What You Need to Know

With the increase in people purchasing properties in Wales, the Welsh government is altering the holiday let regulations to prevent the purchase of second homes or holiday let businesses from affecting local communities. In this article, we will discuss the changes to business rates and council tax premiums, planning permission, and what these changes could mean for those looking to let out their properties as holiday lets in Wales.

Changes to Business Rates and Council Tax Premiums for Holiday Lets in Wales

Business rates and council tax are used to fund local services, but they differ in terms of the purpose of the property. When a property is used for commercial purposes, business rates are applied instead of council tax. In Wales, a property set up as a holiday let business is exempt from paying council tax if it is made available for 140 days and occupied by paying guests for 70 of those days. If it meets these criteria, the property owner is eligible for business rates instead of council tax.

Starting April 2023, the Welsh government has raised the requirements for a holiday let property to qualify for business rates. A property will now need to be made available for 252 days and occupied by paying guests for 182 days to be eligible for business rates. If a property does not meet these requirements, the property owner must pay council tax.

Additionally, local councils in Wales will be able to charge higher premiums of council tax on second homes and holiday lets from April 1, 2023. If a property is set up as a holiday let business but does not reach the required 182 days of occupancy, the property owner will be charged council tax instead of business rates, and the council tax premium will be decided by the local council.

Planning Permission for Holiday Lets in Wales

Planning permission is an essential aspect of holiday letting, and it can be the deciding factor on whether a holiday let business can go ahead. Planning laws differ across the country, and further differences will soon come in place in Wales, where planning laws are being altered.

As second homes and holiday lets are not defined under current planning laws, the Welsh government is rewriting them. Soon, moving from a lived-in home to a second home or holiday let will require permission from the local council. The Welsh government is proposing to do this by imposing planning use permits.

The Welsh government is planning to introduce three new classes for planning use:

• A primary home

• A second home

• Short-term holiday accommodation

A local planning authority will be able to make alterations to the planning system by requiring planning permission to change from one class to another, but they will need to provide evidence for their decision. This means that councils will be able to put a cap on the number of second homes and short-term lets in the local community.

Change of Use Permit

Planning permission in the form of a change of use permit will be required for anyone who wants to use their property as a business instead of residential purposes. Local councils will be given more power to decide on applications for changes of use. Before deciding, councillors from local areas must consider the balance of primary and secondary homes in a neighbourhood.

What These Changes Mean for People Looking to Let Out Properties as Holiday Lets in Wales

The changes in criteria to qualify for business rates may put off many people from trying to set up holiday let businesses, and the high council tax premiums could deter people from purchasing second homes for private use. However, ministers for the Welsh government have taken this decision as a way of ensuring that second homeowners make a fair contribution to local communities.

If you are unsure about any of the changes, you should contact your local council for advice. You can also read our full guides on furnished holiday let tax, council tax and business rates, and legal requirements for letting a holiday property.