An attempt to force empty second homes on to the market by demanding that businesses let their properties for 182 days a year risks destroying the self-catering holiday industry in Wales, business leaders have warned.

Will Humphries www.thetimes.co.uk

The high threshold set by the Labour government in Wales is said to be impossible for many holiday let owners to reach and is penalising farmers and homeowners trying to supplement their incomes by converting barns and outbuildings on their land.

If owners do not hit the threshold of 182 days let and 252 days available to let, they revert to paying council tax as an “empty second home”. The threshold in England is 70 days let and 140 available to let.

Once reverted to council tax, each Welsh council has been given the option to charge an additional premium of up to 300 per cent council tax on empty second home properties.

The Welsh government brought in the rule last year to combat the number of second homes in holiday destinations by forcing empty second homes to be put on the market as residential properties.

However, in a survey by the Professional Association of Self Caterers UK — which received responses from 1,500 Welsh business operators — only 51 per cent said they had hit the 182 days’ let target in the year to March 2023 and only 25 per cent thought they would reach the target in the year to next March. Seventy per cent said they were discounting to try to hit the 182-day threshold, so were losing money because they were unable to pass on rising energy and electricity costs.

Alistair Handyside, executive chairman of the association, said: “Getting these enormous [council tax] bills at the end of a poor year’s trading is horrendous. We are seeing real mental health issues as a result of the pressures. What other kind of business has to hit a deliberately high threshold set by government in order to not pay tax?”

Handyside said there were only so many holiday days for which most operators could find customers. “It’s illegal to take kids out of school in term-time and empty nesters are not a big enough market to fill weeks in the out season,” he said. “Even if you filled all the holidays, bank holiday weekends and every weekend in the year you would not achieve close to 182. It would be nearer 100, which is why all the industry has been asking for a 105-day threshold for years. To achieve 105 you would still need to be open all year — and add to this the variables of the economy, weather and market demand.

“This summer was pretty much a washout. This creates a double whammy for self-caterers. Less income, more tax. With [a] beach luxury pad you can probably hit 182 [easily], but with a small cottage nestling in the Welsh hills in a less known area? Not a chance, even if [the] economy, weather and marketing all aligned.”

Mandy McDermott, 58, who bought a farmhouse with three holiday lets in converted barns, said the mental stress of chasing the 182-day target was “horrendous” and that if she did not make it she could face paying about £5,000 in taxes.

McDermott, who runs her Golly Farm Cottages business near Wrexham, north Wales, said: “My holiday lets are clearly a business because they can’t become second homes under planning restrictions. There are a lot of us with converted barns and outbuildings who shouldn’t be caught up in this.”

She said that the cost of living crisis was affecting bookings while at the same time pushing up her own costs. “The council doesn’t tell a baker they have to sell 150 granary loaves,” she said. “It just leaves you thinking who is running my business here? Someone in the government sitting somewhere with a bonkers idea.”

A Welsh government spokesman said: “The changes to the local tax rules for self-catering accommodation and second homes are designed to help develop a fairer housing market and ensure property owners make a fair contribution to the communities where they own homes or run businesses.

“Tourism makes an important contribution to the Welsh economy and to Welsh life. We do, though, need to ensure appropriate balance. We believe that everybody has a right to a decent, affordable home to buy or to rent in their own communities so they can live and work locally.”