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Welsh Government Proposes Easing Holiday Let Business Rates Rules

The Welsh government has launched a 12-week consultation on proposals to relax the rules determining when a holiday let becomes eligible for business rates relief. The move could make it easier for holiday let owners to qualify for business rates rather than council tax.

Currently, holiday lets in Wales must be available to rent for at least 252 days a year and actually booked for at least 182 days to qualify for business rates. These thresholds have been in place since April 2023, following concerns about second homeowners avoiding council tax and a significant increase in properties listed for non-domestic rates.

Since the introduction of the higher threshold, the number of self-catering properties listed for non-domestic rates has dropped to around 8,000, a reduction of about 3,000. The Welsh government is now considering the impact of these rules on genuine self-catering businesses, noting that some properties do not reach the 182-day booking requirement but are still let for nearly half the year and contribute to the local economy.

The consultation proposes shortening the number of days a property must be available and booked to qualify for business rates, with a four-week reduction being considered. The government has not confirmed the exact new threshold. There is also a suggestion that exemptions could apply to certain properties, such as those on the owner's farm or large multi-unit properties.

The rules have been criticised by holiday let owners, especially in seasonal and rural areas where demand fluctuates. Some owners have faced higher council tax charges, with premiums up to 300% in some areas. The consultation aims to address concerns that the current thresholds do not reflect the realities of tourism in Wales, particularly in areas with seasonal demand.

Letting agents and inventory clerks in Wales should be aware of these proposed changes, as they could affect the eligibility of holiday lets for business rates and impact the local rental market.