Second Home Premiums Added £9.1m To Council Coffers

Second home-owners in Pembrokeshire, whose 200 per cent council tax premiums have contributed more than £9m to council coffers in this financial year, are not expected to see that level rise if a recommendation before full council is backed later this week.

Second-home owners, since this financial year, have been paying a 200 per cent premium on their council tax, effectively a treble rate, following an increase from the previous 100 per cent (or double rate) premium.

Under Welsh Government legislation, local authorities are able to increase the council premium on second homes to as much as 300 per cent, effectively a quadrable rate.

Long-term empty properties in the county are also currently charged a premium council tax rate: 100 per cent after 24 months, 200 per cent after 36 months, and 300 per cent after five years.

At the October 7 meeting of Pembrokeshire County Council’s Cabinet, members backed recommending to full council, meeting on October 17, that the second homes premium remain at the current 200 per cent, with the long-term empty property rates also remaining at the current levels.

The report also included a review of the council’s discretionary discount policy in relation to properties returning into the council tax list from non-domestic rating following the Welsh Government change to a 182 days criteria for holiday lets rate relief, with Cabinet members recommending full council write to Welsh Government asking them to reduce the 182 days let threshold.

A Pembrokeshire consultation has been undertaken on the level of Council Tax premiums, which had one of the highest responses ever received by the council, saw 2,974 responses, with 2,155 from someone whose main residence is outside of Pembrokeshire, along with 67 responses from organisations.

From October 2017-August 2024, the number of second homes paying the premium had dropped from 3,889 to 3,221, with exemptions rising from 137 to 760 over the same period.

In April 2023 councillors backed 75 per cent of the funds raised from the second homes premium be used to fund elements of the council’s budget relating to affordable housing and enhancing the sustainability of local communities, the remaining 25 per cent spit 75/25 for the Affordable Housing programme and the Enhancing Pembrokeshire Grant scheme.

From April 1 of this year, that was changed to 85 per cent, the remaining 15 per cent to the other two areas.

For long-term empty properties this was set at 100 per cent for elements of the council’s budget relating to affordable housing and enhancing the sustainability of local communities.

In the previous two financial years the additional income had been placed into an Empty Property Reserve for bringing homes back into use.

Following the Cabinet recommendations, a report before the October 17 meeting of full council asks members to back the Cabinet recommendations, saying: “The consultation shows that some second homeowners support the need for a Council Tax premium, albeit at a lower level than current 200 per cent.

“The current council tax premium level does seem to be changing behaviour as we are seeing a greater number of properties on the market and the overall number of self-catering units and second homes are starting to reduce.  The council still has a large homelessness issue and while the market is moving the current level of council tax premium is achieving its aim. As such there seems little reason (or support) to look to increase it.

“Whilst the consultation demonstrates that there is little support for the current level of second homes council tax premium and there have been concerns raised from the tourism industry, it is potentially too soon to change a policy that would seem to be starting to achieve its intended consequences of bringing down the overall level of second homes and self-catering units.”

The report says second homes and empty properties premiums contributed £10.8m to the council’s budget relating to affordable housing and enhancing the sustainability of local communities during 2024-25, £9.1m from second homes.

It said any reduction in the premium would increase council future budget pressures, listing the effects of a potential 25 per cent drop for the next financial year, leading to a £1.3m drop on a potential general council tax increase of 11.14 percent and £1.2m for a potential 7.5 per cent rise.