Author : Mary-Anne Bowring
The Wales government has long debated the issue of second homes and long-term empty properties. The question is: Has the government has sought the right solutions to address housing shortages and promote affordability? Council tax premiums mean people paying the normal council tax plus extra for second homes and long-term empty properties - it is a policy that has been proposed to encourage property owners to bring their properties back into full-time use to add to the housing supply, but opinions on their effectiveness vary.
Since April 2017, local authorities in Wales have had the authority to levy council tax premiums of up to 100 percent on long-term empty dwellings and second homes. The purpose behind these premiums is to motivate property owners to convert their vacant properties into safe and affordable homes.
Wales: the 2023 rise in Council Tax premiums
Changes are on the horizon, with the maximum premium set to increase to 300 percent from April 2023. It's important to note that there are exceptions, such as properties actively marketed for rent.
Opinions on the effectiveness of council tax premiums are divided. An article on a leading property portal has raised concerns that these premiums might not be powerful enough to encourage property owners to re-enter the rental market.
The Welsh government's initiative might be well-intentioned, but it may need further consideration to ensure it positively impacts housing availability. A contrary viewpoint is that instead of penalising second homeowners, pressure should be placed on local councilors to ensure the construction of sufficient affordable housing. This perspective emphasises collaboration with property owners and local authorities to address the housing shortage with a different approach.
Wales: Should Council Tax Premiums be staggered?
One unique approach suggested is the introduction of graduated premiums based on the duration of property vacancy.
Long-term empty properties will face a 50 percent premium for being vacant between one and two years, escalating to 100 percent for properties that have remained empty for over two years.
Also, from April 2024, all second homes will be subject to a 100 percent council tax premium, highlighting a proactive local strategy.
While Wales is grappling with housing shortages and property vacancies, England is actively engaging in consultations regarding potential exceptions to council tax premiums. The outcome of these discussions could shape the future of housing policies and premiums across the region, providing valuable insights for crafting effective solutions.
The issue of second homes and long-term vacant properties in Wales underscores the complexities of housing availability and affordability. Council tax premiums have emerged as a potential tool to incentivise property owners, but their impact remains a subject of debate. As discussions continue and viewpoints evolve, a multi-faceted approach involving collaboration between property owners, local authorities, and government bodies may be key to addressing these housing challenges.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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