Since April 2023, self-catering properties in Wales must be available to let for at least 252 days and let for 182 days in 12 months to qualify for non-domestic rates rather than Council Tax.
Key proposals
The consultation outlines two specific changes to provide more flexibility and stability for holiday let businesses:
- Averaging lettings over multiple years – Instead of meeting the 182-day letting threshold every year, owners could use a two- or three-year average to demonstrate compliance. This would allow properties that fall just short in one year to retain non-domestic status, reducing uncertainty and avoiding frequent reclassification.
- Allowing charitable use to count – Up to 14 days of accommodation donated to a registered charity would count towards the 182-day requirement, supporting public benefit and encouraging community contributions without penalising operators.
The Welsh Government is also seeking views on whether local authorities should be encouraged to implement a 12-month grace period at standard Council Tax rates before applying any second home premium. This would mirror Monmouthshire County Council’s 2024 policy, offering holiday let owners time to adjust if reclassified.
Protecting traditional landlords
While these proposals offer increased flexibility for existing holiday let operators, they do so without reversing the intent of the 2023 reforms. The thresholds introduced in 2024 are already helping reduce the misuse of Council Tax exemptions and encouraging property owners to return homes to residential use.
It is pleasing to see these latest proposals strike a proportionate balance: recognising operational challenges faced by genuine businesses, while protecting long-term rental supply from opportunistic switching.
Propertymark supports efforts to improve clarity and fairness in the application of local taxation. However, we remain concerned about the long-term impact of short-term letting on the availability and affordability of rental homes.
Fairness returns as holiday let tax breaks scrapped
HMRC is abolishing tax breaks for furnished holiday lets (FHLs) to take effect from April 2025, bringing in an extra £35 million to the exchequer in the first year. Propertymark has long called for parity between short-term and residential letting, and we welcome this move towards greater balance in the market.
Next steps
Propertymark encourages members in Wales with interests in holiday letting to review the proposals and submit their views. We will also respond directly to highlight the need for a practical, evidence-based approach to self-catering classification.
