Agenda item

To submit the report of the Cabinet Member for Finance  (attached).

That the Council defers the decision with regards to permitting discounts and charging a premium, asking the Cabinet to consider the propriety of increasing the level by up to 100%. The Cabinet is requested to hold a consultation process on this basis, to consider the relevant factors, and to submit a further recommendation to the Council in March 2021 in accordance with Section 12, 12B and 12A of the Local Government Finance Act 1992.

 

The Cabinet Member for Finance, Councillor Ioan Thomas, presented a report asking the Council for formal confirmation for 2021/22, of the previous decisions not to give discounts to second homes and to disallow discounts on empty properties, and to raise a premium of 50% on such relevant properties.

 

In specific reference to second homes, the Cabinet Member noted:- 

 

·         That the provision and density of holiday homes had grown over recent years, together with the associated effect socially, economically and environmentally.

·         That the popularity of Gwynedd as a holiday destination and the use of holiday accommodation as a financial investment were factors, and a significant growth had been seen recently across the whole county in the number of residential units used as holiday accommodation.

·         That it was proposed to submit a research paper on managing the use of dwellings as holiday homes to the Communities Scrutiny Committee on 10 December, with specific recommendations to be discussed in the Cabinet on 15 December.

·         Although it was recognised that it would not be possible to implement those recommendations immediately, due to the need for legislation by the Welsh Government, the rate of the Premium on property was a matter that the full Council could act upon. 

·         There had been regular correspondence as well as formal and informal meetings between Gwynedd Council, ministers and officers from the Welsh Government, to discuss our concerns regarding the ability of second home owners to use Section 66 of the Local Government Finance Act 1988 to transfer their property from domestic property, paying Council Tax, to self-catering units, that are subject to non-domestic rates.

 

The Deputy Leader noted:-

 

·         That the recommendation proposed to continue with the existing situation to raise a premium of 50% on second homes and empty homes, however, it had become evident from discussions with members, proposals in the Council and public demands in our communities, that it was necessary to reconsider the Premium, with the intention to increase it.   

·         The situation in the county was critical, with housing stock being lost to second homes with local people unable to afford buying homes in their communities.

·         The Cabinet and the members had been pressing the Government to change the act and to give us powers to control second homes.   The Government had stated that we had no evidence to justify this, however, the evidence had not been published and would be discussed soon. 

·         In addition to discussing the research paper on managing the use of dwellings as holiday homes, the Cabinet on 15 December would discuss the Housing Action Plan, an ambitious and exciting plan that would invest approximately £77m in providing housing for young people in the county.  

·         Being aware of the strong feelings regarding this matter, he wished to make an amendment to delete the words "and raises a premium of 50% on class B second homes " in the second bullet point of the recommendation, by inserting the words " but deferring the decision regarding setting the Premium and to request that the  Cabinet consider the propriety of increasing the level to 100%.  The Cabinet is requested to hold a consultation process on this basis, to consider the relevant factors, and to submit a further recommendation to the Council in March 2021 " following "class B".  The amendment was seconded.

 

Members were given an opportunity to make observations and ask questions on the amendment.  Individual members submitted the following observations:-

 

·         It was suggested that more discretion should be used in the context of empty homes in the process of being repaired.   

·         Concern was expressed that raising the Premium on second homes to 100% may push more people to find ways of avoiding paying the tax.   Many owners of second homes declared that their house in Gwynedd was now their main residence, and a call was made to look into this, and to also look at ways of testing that all the 2000 homes transferred to non-domestic tax were businesses. 

·         It was emphasised that a national campaign was required to close the loophole in terms of the transfer of holiday homes to businesses, and there was room for Gwynedd Council to lead on this. 

·         It was noted that it was greatly hoped that the Cabinet would support the amendment and would also offer ideas beyond the matter of only tax.   

 

In response to the observations and questions from individual members, the Head of Finance noted:-  

 

·         That the principle of allowing a Council Tax exemption for a longer period to first time buyers who were repairing old houses was one of the projects within the Housing Action Plan, and therefore this should receive early attention.    The Cabinet could make a decision regarding the period, however, officers did not have much flexibility per case with this.  

·         That Council Tax collection arrangements were very effective and second home owners could pay promptly.  However, the Council would lose the tax as well as the Premium, on property that transferred to a business, ad was also hit by backdating. The number that had transferred last year was over 400, and the figure was already close to that this year. In previous years, there were approximately 300 a year.

·         The Leader, Chief Executive, the Head of Finance and others had worked with the Government around March / April this year to put rules in place so that every property that transferred did not receive the Covid grant, however, in the end between half and three quarters of them received the grant, as it was proven that the property was let for more than 140 days a year in those cases.    Although there was a wish to exempt them completely, this would have exempted some actual holiday businesses, and in the end this was a compromise.

·         As a Council Tax collector the Council could police the position regarding main residences, e.g. by checking to what addresses their bank statements were sent, etc. However, as the majority that had transferred received full Small Businesses Rates Relief, there was no point in them declaring that the property was their main residence or otherwise.

·         It was the Valuation Office, HMRC agency, that policed the transfer from the domestic list to the business list, however, it appeared that they did not check the evidence very thoroughly.  Therefore, the Council continued to campaign in an effort to convince the Welsh Government to change legislation, and there was work afoot by the Finance Department, and also by the Planning Service, to proceed in the hope that there would be some progress over the coming months.

 

Referring to the wording of the amendment, the Chief Executive explained that amending the second bullet point only was inconsistent with the first section that recommended that the Council did nothing to the plan for 2021/22. Therefore, he suggested that the amendment was covered in the whole decision, in order that the entire decision could be referred back to the Cabinet.    

 

The amendment proposer noted that he was happy to change his amendment in accordance with this, and the seconder also consented to the change.

 

Councillor Eryl Jones-Williams noted that would not vote either way on this matter, has he had lost connection for the majority of the discussion.

 

RESOLVED that the Council defers the decision with regards to permitting discounts and raising a premium, asking the Cabinet to consider the propriety of increasing the level by up to 100%. The Cabinet is requested to hold a consultation process on this basis, to consider the relevant factors, and to submit a further recommendation to the Council in March 2021 in accordance with Section 12, 12B and 12A of the Local Government Finance Act 1992.