Written question WQ89782

I have considered the results of the latest survey by the Professional Association of Self-Caterers (PASC) with interest, in the context of the aims and potential impacts of our changes to local taxes for self-catering holiday lets (as articulated in the Regulatory Impact Assessment (RIA) for the associated legislation) and the PASC survey conducted last year following our announcement of the changes. Overall, the survey results appear to be consistent with our assessment of the potential impacts of the changes. They also suggest that the stated aims of the policy are beginning to be realised.

The primary aims of the policy are to ensure property owners are making a fair contribution and to maximise the use of property, to the benefit of local communities. This could include benefits arising from increased occupancy for short-term letting or the release of some properties for sale or rent as permanent homes for local people.

It is encouraging to see that 50% of the operators responding to the survey achieved 182 days letting before the new criteria came into effect on 1 April 2023. This aligns with the evidence included in the RIA from previous Wales tourism accommodation occupancy surveys. It also appears to demonstrate an increase in letting activity among the group of operators surveyed – up from the 34% who said they had achieved or exceeded that level in spring 2022 following our announcement of the changes. It is also welcome that many operators have adapted their offers to help achieve those increases in occupancy. The increased lettings achieved by many operators will support the economic benefits described in the RIA.

Given that the survey results suggest that operators have been able to sustain or increase the occupancy of their properties, it is not clear why the proportion achieving 182 days letting might halve, from 50% to 25%. This does not appear to align with what was achieved last year, when operators were able to surpass forecast levels of occupation. The difference in survey results from last year to this year gives cause for optimism and demonstrates that it is too early to draw such a conclusion.

The RIA also acknowledged that selling their property would be one of many options available to operators in response to the changes. The majority of survey respondents are not now considering this course of action. This appears to be a considerable improvement in the outlook of operators compared with responses to the previous survey, when only 16% indicated they intended to stay open for the foreseeable future.

Properties would become liable for council tax if they do not meet the letting criteria for classification as non-domestic property. It is for individual authorities to decide whether to apply a council tax premium and at what level to apply it. In making these decisions, each authority will need to make an assessment of the possible impacts on individuals, communities and the local economy.