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April 29

Council Lose from Second Home Tax Premiums

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A politician, Janet Finch-Saunders, representing Aberconwy in the Welsh Parliament, has raised concerns regarding the financial impact of second-home council tax premiums on local authorities. These premiums, which often double the standard council tax rate, are believed to be resulting in financial losses for local governments. To investigate further, Finch-Saunders has submitted freedom of information requests to gather data on the financial losses incurred by local authorities when property owners opt to pay business rates instead of council tax.

The move by Finch-Saunders highlights a growing debate surrounding the effectiveness of second-home council tax premiums. While intended to address housing affordability and support local communities, these premiums may inadvertently lead to financial losses for local authorities. By seeking transparency through freedom of information requests, Finch-Saunders aims to assess the true impact of these premiums on local government finances.

The data obtained through these requests will provide valuable insights into the financial implications of second-home council tax premiums. Local authorities can use this information to evaluate the effectiveness of existing policies and explore potential adjustments to mitigate any financial losses. Additionally, this initiative may spark further discussions on alternative approaches to addressing housing affordability and supporting local communities in regions with high levels of second-home ownership.

Janet Finch-Saunders has highlighted financial losses in several local authorities. For instance, Ceredigion reported a loss of £1 million since 2016/17, while Conwy experienced a loss of £1.8 million since 2012/13. Additionally, Pembrokeshire recorded a loss of £3.6 million since 2019/20. These figures underscore the significant financial impact of the council tax premium on second homes.

In a statement on her website, Finch-Saunders elaborated on the potential scope of these losses. She suggested that the figures might be even higher if properties switching from second homes to business rates in one financial year continued to qualify for business rates in subsequent financial years. This projection highlights the ongoing financial strain faced by local authorities due to the transition of properties from council tax to business rates.

The revelation of substantial financial losses raises concerns about the effectiveness of second home council tax premiums. As local authorities grapple with budget constraints, understanding the full extent of these losses becomes crucial for implementing effective fiscal policies. Finch-Saunders’ findings underscore the need for a comprehensive review of the current system to address potential loopholes and mitigate financial risks for local councils.

She comments on the impact of the second home premium, stating, “The evidence from West Wales is clear that the second home premium is failing in its claimed aim of delivering more homes for people to live in.” Authorities like Conwy, Ceredigion, and Pembrokeshire witness numerous properties switching to qualify for business rates rather than paying normal council tax, let alone the premium.

According to her statements, Ceredigion has recorded a financial loss of £1 million since 2016/17, while Conwy has reported a loss of £1.8 million since 2012/13, and Pembrokeshire faces a financial loss of £3.6 million since 2019/20. She highlights that these figures would be even higher if properties switching from second homes to business rates in one financial year continued to qualify for business rates in subsequent financial years.

In a statement on her website, Finch-Saunders emphasizes the financial impact of this trend, noting that the losses incurred by local authorities due to the second home premium highlight a significant challenge in addressing the housing shortage. She urges for a reevaluation of the effectiveness of the second home premium policy, suggesting that it may not be achieving its intended purpose of increasing the availability of homes for permanent residents.

“In light of the financial challenges faced by local authorities in Wales, the implementation of a second home policy resulting in substantial financial losses is a significant failure on the part of the Welsh Government,” stated a spokesperson. “It’s clear that without the introduction of second home premiums, there would likely be an increase in properties contributing to council tax revenues, which could benefit local authorities financially.”

“At a time when local authorities across Wales are struggling financially, it is a major failure of Welsh Government that they have developed a second home policy for local authorities to implement that results in major financial losses,” the spokesperson added. “The evidence from regions like Conwy, Ceredigion, and Pembrokeshire indicates a trend of properties shifting to qualify for business rates, rather than paying regular council tax, let alone the premium.”

“The evidence from West Wales is clear that the second home premium is failing in its claimed aim of delivering more homes for people to live in,” remarked the spokesperson. “Authorities such as Conwy, Ceredigion, and Pembrokeshire are seeing high numbers of properties switching to qualify for business rates, rather than paying normal council tax, let alone the premium.”

 


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Council Tax Premiums, Janet Finch-Saunders


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