One part of the UK facing some of the steepest property taxes has seen a surge in landlords and second home owners looking to offload their properties.
According to a report by the Financial Times, Gwynedd county in Wales already enforces a hefty 150% council tax premium on additional homes. Beyond that, all second homes in Wales face a 5% surcharge on top of the standard Land Transaction Tax, which is the Welsh version of stamp duty.
To make matters more complicated, owners hoping to register a holiday let as a business – and thereby benefit from lower business rates instead of council tax – must meet strict requirements. The property has to be made available to let for at least 252 days each year and must actually be let out for at least 182 days.
Adding further pressure, Gwynedd council introduced an Article 4 Direction nearly a year ago. This planning measure means homeowners must now apply for specific planning consent to change a main residence into a holiday let or second home, adding time, cost and uncertainty to the process.
Unsurprisingly, these measures have affected the local housing market. Rightmove figures from June this year reveal there were 146% more homes for sale in the area compared to June 2021. This spike suggests that many owners are exiting the market in response to rising taxes and tighter rules.
Local estate agent Martin Lewthwaite from Beresfords highlighted the change on the Llyn Peninsula, a well-known holiday hotspot. He noted there are now roughly 600 properties for sale in the area, which is about double the usual number seen at this time of year.
Meanwhile, Knight Frank reported that the number of agreed sales in Gwynedd dropped by 34.3% between 2021 and 2024. During the same period, house prices in the county rose by 24%, which is noticeably lower than the Welsh national average increase of 31%.
Despite a significant 295% rise in tax revenue collected from additional home owners since 2019, the housing crisis locally has not eased. In fact, the number of households declared homeless in Gwynedd now stands at 956, up from 745 before the more severe taxes and planning measures came into force.
The intent behind these policies was to reduce second home ownership and ease pressure on local housing. However, the data suggests they may have had unintended consequences, including slowing sales activity and limiting affordability for local buyers.
For many property owners, the higher taxes combined with stricter planning laws have tipped the balance, making holiday lets and second homes financially less attractive. This shift has led to a greater number of listings, but also a cooling in buyer demand.
The challenge for Gwynedd, and other areas adopting similar measures, is to balance the need for affordable homes for local residents with the economic benefits brought by tourism and second home owners.
While the policy changes are well intentioned, the longer-term effects on local communities, property values, and homelessness figures remain a topic of debate.
In the meantime, estate agents and property experts continue to watch the market closely to see how buyers and sellers respond over the coming months.
Ultimately, it remains to be seen whether these tax measures will genuinely solve housing shortages – or simply shift the problem in other ways.