Welsh Government will press on with plans that could hike taxes on holiday properties that are not rented out at least half the year - despite significant opposition in the sector.
The government unveiled plans this year to give councils the power to increase the council tax premium on second homes to 300% and add stricter rules on minimum letting times to qualify for business rates. They said it was part of a raft of measures to support people to buy homes in their local communities.
Currently, self-catering properties in Wales must be available to let for a minimum of 140 days in any 12-month period, and actually let for at least 70 days to qualify for business rates rather than council tax.
READ MORE: Holidaymakers staying in Wales WON'T have to pay tourism tax for 'years'
Welsh Government proposed that under the new rules properties must be available to let for at least 252 days and actually let for at least 182 days to qualify for business rates.
Today they confirmed they would press on with the new minimum dates, which will take effect from April 2023. A decision on what council tax premium will be charged on second homes - if any - will be down to individual local authorities.
Welsh Conservatives said it was "devastating blow" to the self catering sector and would "cost jobs and livelihoods".
MWT Cymru, which represents more than 600 tourism and hospitality businesses across Powys, Ceredigion and Southern Snowdonia, said 66% of the businesses it recently surveyed said they would be unable to meet the new rule of letting their properties for 182 days due to the short tourism season in Wales. Several businesses said they would be forced to consider closing as they could not afford to pay 300% council tax if their local authority decides to impose that rule.
The Wales Tourism Alliance(WTA) echoed these concerns. They said: "Even the most vigorous marketing of quality self-catering business accommodation cannot guarantee the equivalent of six months of end-to-end bookings. It would be erroneous to make any assumptions based on the pandemic period as this cannot be seen as indicative of future demand patterns."
But Finance minister MS Evans said: "The views conveyed in the consultation, including those from respondents representing the wider tourism industry, clearly support a change to the criteria for self-catering accommodation to be classified as non-domestic.
"Respondents were of the view that the majority of genuine holiday accommodation businesses would be able to satisfy increased letting thresholds, and a wide range of possible alternatives was suggested. Increasing the thresholds will provide a clearer demonstration that the properties concerned are being let regularly and are making a substantial contribution to the local economy.
"Following our consultation, the Welsh Government is of the view that properties let out as self-catering accommodation on an infrequent basis should be liable for council tax. Increased letting criteria will ensure that self-catering properties are classed as non-domestic, only if they are being used for business purposes for the majority of the year."
She added: "There is limited evidence available in relation to some of these considerations and I am grateful to the sector for providing additional information they have gathered from their members."
The Order will come into force on 14 June 2022 and have practical effect from 1 April 2023, applying the amended criteria from that day onwards. Property owners intending to meet the amended criteria should aim to do so during the 2022-23 operating year, but compliance with the criteria will not be assessed until after 1 April 2023.
She said that she would issue revised guidance to local authorities on additional options that are available in the event that self-catering properties restricted by planning conditions do not meet the letting criteria.
She added: "As part of the Co-operation Agreement with Plaid Cymru, we are committed to taking immediate action to address the impact of second homes and unaffordable housing in communities across Wales, using the planning, property and taxation systems."
Following the decision the WTA said: "Unbelievable, utterly disappointing. Welsh Government says it has limited evidence. So why is it making policy?"
Jim Jones, chief executive at North Wales Tourism, added: "Disgusting and absolutely dreadful, after all the evidence WTA submitted, they have simply ignored it."
Welsh Conservative Shadow Minister for Culture, Tourism and Sport, Tom Giffard MS said: “This is a devastating blow to self-catering accommodation providers across the length and breadth of Wales.
“These new letting requirements will frankly be impossible for many self-caterers to meet and will decimate the Welsh tourism industry.
“Labour Ministers should be focused on helping the sector bounce back from Covid, not wreck the fragile recovery and put jobs at risk."
Welsh Conservative Shadow Minister for Finance, Peter Fox MS, added: “I am deeply concerned at this short-sighted move by the Labour Government.
“Those in the tourism sector have been vocal in their opposition to the 182 days figure, and Labour Ministers have simply ignored them.
“Make no mistake – this will cost jobs and livelihoods.”
