Second homes: what’s happening in Wales?

Published 30/09/2022   |   Reading Time minutes

Wales’ popularity as a tourist destination has created a large second homes market, particularly in scenic rural and coastal areas. However, the high concentration of second homes in these regions has raised concerns over their economic, social and cultural impacts on local communities. Second homes are now high on the agenda of the Welsh Government, which committed to tackling this issue as part of the 2021 Co-operation Agreement with Plaid Cymru.

This article gives an overview of the second homes issue in Wales and responses of the Welsh Government to date.

What are second homes?

“Second home” is commonly used to refer to a property which isn’t a person’s main residence but is used occasionally by the owner, their family and friends.

There’s not always a clear distinction between that type of property and one used occasionally or regularly for short-term lets. Sometimes people use the term holiday homes to cover both types of property.

How many second homes are there in Wales?

Calculating the number of second homes in Wales, or holiday homes more broadly, is difficult. According to council tax data, there were 23,974 secondary homes in Wales as of January 2022. This makes up a relatively small proportion of the overall number of dwellings in Wales, which in early 2020 stood at 1.43 million.

However, these figures don’t fully account for second homes that may also be used for short-term lets providing self-catering accommodation, some of which are registered as businesses and so don’t appear on council tax lists.

The figures also don’t account for the highly uneven distribution of second homes across Wales. In a 2020 report on the number of ‘holiday homes’ in Wales (meaning both private second homes and short-term lets), Gwynedd Council estimated that 10.76% of available housing in Gwynedd was holiday homes, with a figure of 9.15% for Pembrokeshire and 8.26% for Anglesey. By comparison, the proportion in Cardiff was 2.29%, in Swansea 1.92% and in Newport only 0.03%.

Why does it matter?

The high concentration of second homes in specific areas has been linked to several problems. Firstly, there are fears that second homes drive up house prices making housing unaffordable for local people. Gwynedd Council argued in 2020 research there was a link between holiday home ownership and high house prices. However, in a report on second homes published in March 2021, Dr Simon Brooks of Swansea University noted that “…it is impossible to say that second homes are primarily responsible for house price inflation.”

There are also concerns that high numbers of second homes and short-term lets affect community sustainability. As local people move away due to the lack of affordable housing, towns and villages risk becoming increasingly empty outside of the holiday season. This can result in the closure of local services and businesses, other than those supported by seasonal tourism, negatively impacting upon the area’s remaining permanent residents.

Another key concern is the survival of the Welsh language, given that many of the areas most heavily affected by second homeownership are Welsh-speaking. There are growing fears that Welsh language use is declining in its traditional heartlands as the spread of second homes undermines Welsh-speaking communities and pushes younger Welsh speakers away. Campaigners have also argued erosion of the Welsh language due to a lack of available housing is in contravention of the Welsh Government’s Cymraeg 2050 plan, as well as the Wellbeing of Future Generations Act.

However, second homes and holiday homes more generally remain a complex issue. Tourism is a major part of the economy in many rural and coastal areas, and stakeholders in the tourism and hospitality sectors stress that the presence of holiday accommodation is important to maintaining the visitor economy.

Questions have also been raised over whether second homes are solely to blame for the impact on local communities. Second homeowners have argued that they have been unfairly demonised for their role in a multifaceted problem and highlighted what they see as a general shortage of affordable housing in Wales.

Welsh Government action on second homes

Following the publication of the Brooks report, in July 2021 the Minister for Climate Change Julie James announced the Welsh Government’s new ‘three-pronged approach’, which would address the availability of housing and explore ways of reforming planning and tax systems.

This was followed by the announcement of an ongoing pilot scheme in Dwyfor (Gwynedd) to test proposed measures. The Welsh Government also consulted on the Welsh Language Communities Housing Plan, which aims to provide support for Welsh-speaking communities in areas with a high concentration of second homes.

The Welsh Government announced new legislative measures in March 2022, focusing on tax. From April 2023, local councils will be able to raise the maximum council tax premium on second homes to 300% (up from the 100% limit set in 2017). In addition, new regulations have been set in place to increase the number of days that self-catering accommodation must be let to qualify for business rates.

In July 2022, the First Minister Mark Drakeford and Leader of Plaid Cymru Adam Price jointly announced upcoming changes to planning regulations in Wales, which will see the introduction of new use classes to better differentiate between primary and secondary homes and short-term lets. The announcement also included plans to develop a new statutory licensing scheme for all visitor accommodation and to allow councils greater powers over tax rates and second home numbers.

The new use classes were laid by the Welsh Government on 28 September and come into force on 20 October.

The Local Government and Housing Committee report on second homes

In June 2022, the Senedd’s Local Government and Housing Committee released a detailed report examining the Welsh Government’s response to the issue and evaluating the evidence currently available to policymakers.

The report makes fifteen recommendations to the Welsh Government. Notably, it asks for greater clarity on how second homes are defined and how the effectiveness of legislation enacted to counter their impact will be measured. It also suggests that more detailed research is undertaken into different aspects of the crisis, asking the Welsh Government to update the Senedd regularly on its progress.

The Minister for Climate Change responded to this report on 28 July, accepting most of its recommendations.

Next steps

The Welsh Government has committed to undertake a series of actions around the issue of second homes before the end of 2022. These include opening a consultation on statutory licensing for holiday accommodation, launching a survey of residents on the impact of tourism, and providing updates to the Senedd on how it is addressing the issue of long-term empty properties in areas affected by housing shortages.

The Welsh Government will also begin analysing data on the Welsh language from the 2021 census, following its release across autumn 2022 by the Office for National Statistics.

The Senedd is due to debate the Local Government and Housing Committee’s report on second homes on Wednesday 5 October 2022. You can watch the debate here.

Article by Samuel Young, Senedd Research, Welsh Parliament