Agenda item

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

For 2021/22, that Gwynedd Council:

·         Allows NO discount on class A second homes, in accordance with Section 12 of the Local Government Finance Act 1992.

·         Allows NO discount and RAISES A PREMIUM of 100% on class B second homes, in accordance with Section 12B of the Local Government Finance Act 1992.

Allows NO discount on homes that have been empty for 6 months or more and RAISES A PREMIUM of 100% on homes that have been empty for 12 months or more, in accordance with Section 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 100% on such relevant properties.

 

The Assistant Head of Finance (Revenue and Risk) elaborated on the outcome of the public consultation on the proposal to increase the Premium on second homes and long-term empty properties to up to 100% for the 2021/22 financial year, as well as the legal requirements. He also drew attention to the importance of the Equality Impact Assessment, and members were reminded that they had to consider this assessment when making their decision. An explanation and guidance was provided on the findings, and particular attention was given to the allegation that the proposal could indirectly discriminate groups with protected characteristics, and the need for members to balance this when making their decision.

 

Members of Council staff from various departments were thanked for ensuring the success of the public consultation.

 

A member noted that although he agreed with the Cabinet's opinion that there was increasing pressure on the local housing stock and that holiday home owners had the means to pay a bit more, he was concerned that the proposal to increase the availability of affordable housing by increasing the Premium meant that the Cabinet had misunderstood the situation. There was a risk that increasing the Premium by 100% would trigger more second home owners to let their properties and transfer them to the non-domestic rates, which would mean that those houses would be lost forever, as there were no powers available to get them back onto Domestic Rates. He did not believe that Welsh Government had done enough about the situation, and he believed that it should be a requirement to obtain planning permission to transfer houses to Non-domestic Rates. He expressed his concern that the Council would ultimately lose a lot of income, and he was of the opinion that it was premature to raise the Premium by 100%, and that it would be better to wait and see what the situation would be following the Welsh Senedd Election in May. On that basis, he proposed an amendment to stick to the current procedure of charging a 50% premium for 2021/22, amending the second and third bullet-points of the recommendation in the report as follows:-

 

"For 2021/22, that Gwynedd Council:

·                Allows NO discount and CHARGES A PREMIUM OF 50% on class B second homes, in accordance with Section 12B of the Local Government Finance Act 1992.

·                Allows NO discount on homes that have been empty for 6 months or more and CHARGES A PREMIUM OF 50% on homes that have been empty for 12 months or more for 2018/19, in accordance with Section 12A of the Local Government Finance Act 1992."

 

The amendment was seconded.

 

During the discussion on the amendment, other members supported the amendment on the basis:-

 

·         That tourism was one of the main employers of the county, and a further increase in the Premium would lead to job losses in the tourism field.

·         That the county's businesses were on their knees because of the pandemic, and increasing the premium would lead to further hardship for business owners, including local craftspeople, shops, pubs, restaurants, cafés, sailing and golf clubs and tourism attractions.

·         That we were punishing our own people, bearing in mind that some second homes were in the ownership of local people who had inherited them, or who had gone away to work, and wished to return to Gwynedd to retire.

·         That it was the Welsh people who had sold the houses to people from outside the area, but that it was not expected for anyone to sell a house to a local person for less than the market price.

·         That the Welsh people did not wish to buy houses far from the villages, and that many young people were eager to have new and modern houses.

·         That the planning regulations prevented professional young people from building houses in their own villages, because of their size, and despite the fact that a farmer could convert an outbuilding to let, he could not give it to his son, who worked on the farm, as a permanent residence.

·         That the situation needed to be revisited and not to rush to increase the Premium at a time when we were trying to come out of the pandemic and get businesses back on their feet.

·         That this was not the time to increase the Premium, particularly as the owners of second homes had only been able to use their houses for 2-3 months last year.

·         That there was a risk that increasing the Premium to 100% could be interpreted as if the Council was anti-tourism, and the implications of this would be far-reaching as tourism brought so much income to Gwynedd.

·         The Premium should be left at the current level of 50% for this year, and that the situation should be revisited in a year’s time, in the hope that the situation with the pandemic would have improved by then.

·         That the number of transfers to Business Rates had more than doubled since the introduction of a 50% Premium in 2016, and it would be sure to double again were the Premium to be increased to 100%.

·         Rather than increasing the Premium, it would be better to charge an additional 1-2% on the Council Tax, if this money was to be spent on facilitating local young people's access to housing.

·         The 4,500 responders who objected to increasing the Premium would be aware of the possibility to transfer to Business Rates as the Council was discussing that.

·         That the perception that wealthy strangers owned second homes was a sweeping statement and misleading.

·         An inability to see how increasing the Premium would help local people who could not afford houses, as the average house price in Wales now stood at £200,000. 

·         The Council could lose the money that it intended to invest in the Housing Strategy as an increasing number of second home owners transferred to Business Rates.

·         That people had now accepted the 50% increase, and that they should stick with that.

·         If people found it difficult to maintain a second home that they had inherited, they should consider selling them.

·         That Welsh Government's attitude towards second homes was unacceptable and that the Well-being Act was completely meaningless.

·         That there was a need to assert pressure in order to do something about the high number of empty homes in Gwynedd.

·         Increasing the Premium would create a risk that the owners of second homes would sell their houses, and turn their backs on Gwynedd once and for all.

·         That Gwynedd businesses would need the visitors' money when it was safe for them to return.

·         That people questioned the purpose of participating in the consultation if the Council disregarded the responses.

 

Other members objected to the amendment on the basis that:-

 

·         Although it was acknowledged that increasing the Premium to 100% would mean that more owners would transfer to the Business Rates, prioritisation had to be given to people who were unable to get a house over people with more than one house.

·         That charging the Premium would create an income for the Council to assist young people and people on a low-income to buy homes in their own communities, which would also act as a tool to address social inequality in Gwynedd.

·         That the discretion for councils to charge a Premium should be a means to assist them to recover the use made of long-term empty properties, in order to provide safe and affordable homes, and assist councils to increase the supply of affordable housing and improve the sustainability of local communities.

·         That the £22.9m of Council Tax Premium expected to be collected over the plan period would contribute to a number of projects to support people in Gwynedd as part of the innovative Housing Action Plan, and that there was potential here to attract more money in order to do more to house the county's residents and start addressing the housing crisis.

·         This was not an attempt to punish second-home owners, but rather provide a vision and achieve fairness for all residents of Gwynedd.  Therefore, obtaining more money through this method would do more to house the people of Gwynedd and assist the Council to reduce injustice in the county.

·         That the Council had a duty, under the Well-being of Future Generations Act, to ensure social justice, prosperous and sustainable communities, and to ensure safe and affordable homes for residents across Gwynedd. It was hoped that Welsh Government would also consider their responsibilities under the Act in the context of the second-home crisis, and ensure homes for people in their communities.

·         That the report of Dr Simon Brooks, who had been commissioned by the Minister for Mental Health, Well-being and the Welsh Language, made 12 recommendations to Welsh Government to address the second-home crisis.  One of those recommendations was that councils who discover that second-homes are a serious social problem should use their taxation powers in full, and charge a 100% Council Tax Premium on second-homes.

·         Although it was acknowledged that there was an element of risk in terms of the loophole, it would be more sensible to charge the Premium, and at the same time, ask the Government to adopt parallel policies in an attempt to persuade owners not to transfer property from Domestic Rates to Business Rates.

·         That charging the Premium was only one solution to increase the supply of affordable housing and improve the sustainability of local communities, and that there was also a need to look at making short-term accommodation exempt from being eligible for small business rate relief and change the Planning Act so that it was mandatory to obtain planning consent to convert a dwelling house into a holiday home, or holiday unit.

·         In terms of public policy, it would be more difficult to change planning legislation if we did not use the existing taxation powers. 

·         That some objectors were saying that their second home had been in the family for generations, and that they were used to coming to Gwynedd on holiday. Although that was sad, the situation in the individual wards was much sadder, with 3-4 generations living in completely unsuitable houses, because a vast proportion of the housing stock was being used by people who had two homes.

·         That pressure should be asserted on the Government to determine the maximum number of dwellings that could be second homes in any community.

·         That there were no houses available for locals in villages any more, as people from outside the area purchased them as holiday homes.

·         That the housing crisis would become worse as a result of the recent increase in working from home.

·         That the owners of holiday homes tended to spend their money in large supermarkets before they even arrived in Gwynedd, instead of spending their money locally.

·         That the most important element was the one that gave a fairer opportunity to first-time buyers to compete in the local housing market, namely those people who would contribute to the economy for 12 months a year. These would also be the people that would ensure continuation of the community structure that had been so valuable to support each other during the pandemic.

·         That the majority of second-home owners wished to visit balanced and healthy communities, with a shop, pub, café, etc. and were therefore willing to contribute to ensure that people continued to live in their communities.

·         That local people, who had inherited a second home, found it difficult to pay a mortgage etc. on their first house, while refurbishing the second home at the same time.

·         That there were over 2000 people on the waiting list for social housing in Gwynedd and the average waiting time was over 400 days. 59% of the county's residents were priced out of the housing market, and over 10% of the housing stock was now second-homes.

·         That Gwynedd was the county with the highest number of second-homes and the highest number of holiday homes; therefore, if we did nothing, who would address this problem?

·         That some members had suggested waiting until next year before considering increasing the Premium, but time was against the young people who were unable to get a house. 

·         That too many Gwynedd people were being priced out of the local market of being able to buy homes in the areas where they were brought up. This huge injustice needed to be put right, and the situation was getting worse. Urgent action was needed, and it was believed that the recommendation to increase the Premium to 100% was important, and responded to the local housing stock crisis.

·         That everyone agreed that empty houses were a huge problem in our communities and that it was not possible to create or maintain viable and vibrant communities with empty houses.

 

In response to questions from individual members, it was explained:-

 

·         That the risk of property transferring from Council Tax to Business Rates had been registered on the Finance Department's Risk Register with a score of 10, the highest probability. As a result, the actions in response appeared in the Council Plan, and it was intended to continue to assert pressure on the Government to address this.

·         That the majority of the houses that transferred remained as businesses, and the cases that returned to Domestic Rates were few and far between.  The Taxation Service monitored the situation of these properties, and if it was not believed that they were businesses, they could be reported to the Valuation Office. Under the current procedure, the Valuer had to be persuaded that the property was not available to let for 140 days a year, or not let for 70 days a year.

·         That the Council had been pressing on the Government to change the legislation so that domestic property remained on Council Tax, regardless of its use. If the Government were to change this legislation, this would be operational from the date when the legislation came into force, and any that had previously transferred to Business Rates, from that day onwards, would return to Council Tax.

·         That the Empty Houses Scheme, funded via the Premium, provided assistance to bring houses back into use. The plan had been running for 2-3 years and it had been popular and successful, with an investment of over £2m in the past financial year having brought 115 empty houses back into use. An additional £4m had been allocated in the Housing Action Plan over the next 5 years in order to bring 250 additional empty houses back into use.

·         That increasing the Premium to 100% would certainly bring additional money into the coffers. It was estimated that the sum would be around £3m, but that no definitive answer could be given as the shift from Domestic Rates to Business Rates would reduce the figure. The Council was compensated via an additional grant in the following year for the "basic" Council Tax lost through the transfer, but it made losses in the current year, as well as due to any back-dating by the Valuer.

 

A registered vote was called for on the amendment.

 

In accordance with Procedural Rules, the following vote was recorded on the amendment:-

 

In favour (17) Councillors:- Stephen Churchman, John Brynmor Hughes, Louise Hughes, R. Medwyn Hughes, Anne Lloyd Jones, Elwyn Jones, Eric Merfyn Jones, Keith Jones, Sion Wyn Jones, Eryl Jones-Williams, Beth Lawton, Dilwyn Lloyd, Dewi Owen, W.Roy Owen, Jason Parry, Mike Stevens and Hefin Underwood.

 

Against (40) – Councillors:- Craig ab Iago, Steve Collings, R.Glyn Daniels, Anwen Davies, Elwyn Edwards, Alan Jones Evans, Aled Evans, Dylan Fernley, Peter Antony Garlick, Simon Glyn, Gareth Wyn Griffith, Selwyn Griffiths, Alwyn Gruffydd, Annwen Hughes, Judith Humphreys, Nia Jeffreys, Aeron M.Jones, Berwyn Parry Jones, Elin Walker Jones, Gareth Tudor Morris Jones, Huw Wyn Jones, Kevin Morris Jones, Cai Larsen, Dafydd Meurig, Dilwyn Morgan, Dafydd Owen, Edgar Owen, Rheinallt Puw, Peter Read, John Pughe Roberts, Mair Rowlands, Paul Rowlinson, Gareth Thomas, Ioan Thomas, Catrin Wager, Cemlyn Williams, Eirwyn Williams, Elfed Williams, Gareth Williams and Gruffydd Williams.

 

Abstentions (0)

 

The Chair noted that the amendment had fallen.

 

A vote was taken on the original proposal, and it was carried.

 

RESOLVED for 2021/22, that Gwynedd Council:

·                Allows NO discount on class A second homes, in accordance with Section 12 of the Local Government Finance Act 1992.

·                Allows NO discount and RAISES A PREMIUM OF 100% on class B second homes, in accordance with Section 12B of the Local Government Finance Act 1992.

·                Allows NO discount on homes that have been empty for 6 months or more and RAISES A PREMIUM OF 100% on homes that have been empty for 12 months or more, in accordance with Section 12A of the Local Government Finance Act 1992.