Agenda item

To recommend to the Full Council on 1 December 2022 that the following is the favoured option in relation to the level of Council Tax Premium on Second Homes and Long-term Empty Properties for the 2023/24 financial year:

·         That Cyngor Gwynedd allows NO discount on class A second homes, in accordance with Section 12 of the Local Government Finance Act 1992 (i.e. no change).

·         That Cyngor Gwynedd allows NO discount and CHARGES A PREMIUM OF 150% on class B second homes in accordance with Section 12B of the Local Government Finance Act 1992 (i.e. increase from 100% to 150%).

·         That Cyngor Gwynedd allows NO discount on homes that have been empty for 6 months or more and CHARGES 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 (i.e. no change).

 

The report was submitted by Cllr Ioan Thomas     

 

DECISION 

 

To recommend to the Full Council on 1 December 2022 that the following is the favoured option in relation to the level of Council Tax Premium on Second Homes and Long-term Empty Properties for the 2023/24 financial year: 

·                That Cyngor Gwynedd allows NO discount on class A second homes, in  

accordance with Section 12 of the Local Government Finance Act 1992 (i.e. no change). 

·                That Gwynedd Council allows NO discount and CHARGES A PREMIUM OF  

150% on class B second homes in accordance with Section 12B of the Local Government Finance Act 1992 (i.e. increase from 100% to 150%). 

·                That Cyngor Gwynedd allows NO discount on homes that have been empty for  

6 months or more and CHARGES 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 (i.e. no change). 

 

DISCUSSION 

 

The report was submitted noting that it was a step in the governance procedure as the Council moved on to determine how to respond to recent legislative changes in relation to the Council Tax Premium.  

 

It was emphasised that any decision on the rate of the Premium alone did not resolve the serious problem and the numbers of second homes within areas in Gwynedd. It was explained that the use of the planning process and securing second home licensing was much more relevant. The recent response of the Welsh Government was welcomed, highlighting that the Council's perseverance when lobbying and submitting evidence had secured action.  

 

It was explained that the Housing (Wales) Act 2014 had added new sections to the Local Government Finance Act 1992. It was expressed that the new clauses had allowed Welsh billing authorities to charge additional Council Tax on specific property classes. It was also explained that the default position in the 1992 Act was to provide a discount of 50% for the property if the Council did not make a decision every year to fund this from the Council's coffers. It was expressed that the Council had a discretionary right for many years not to give a discount to these properties, and since 2017, the right to charge a premium.  

 

It was highlighted that the Council had charged a 50% premium on second homes and long-term empty properties between April 2018 and March 2021, and then 100% since 1 April 2021. It was explained that on those occasions when the Premium had been introduced and increased that substantial work had been done to assess the situation and hold public consultations and an Equality Impact Assessment.  It was expressed that Sections 12A and 12B of the 1992 Act had been changed again recently and that the changes would be operational from 1 April 2023. It was noted that these changes had been made in order to increase the level of Premium that can be charged by local authorities. It was explained that it would be possible to charge up to 300%.  

 

The Head of Department guided members through the results of the Public Consultation. It was explained that the Cabinet had agreed at the end of September to commission a Public Consultation to ascertain the views of the public on how the Council should respond to the act. The public consultation was launched on 30 September and it remained open until 28 October. It was explained that it was essential to act in accordance with the law to engage with key stakeholders and consequently, direct letters had been sent to the owners.  

 

7,330 responses had been received to the questionnaire, which far exceeded the numbers that usually responded to public consultations, and was over a thousand more responses than a similar consultation held two years ago. It was expressed that over half of the responders noted that they did not own a second home or a long-term empty property. It was noted that 47% owned a second home and less than 3% said that they owned a long-term empty property.  

 

It was reiterated that the results noted that 58.7% of the responses were of the opinion that second homes had a positive impact on communities, which was an increase on the equivalent figure of 55.1% when a similar consultation had been held less than two years ago. It was highlighted that 27.7% believed that second homes had a negative impact, with 8.2% believing that they did not have an impact on the whole. It was explained that there were obvious differences between the views of the responders who owned second homes, and those who did not. It was noted that 80% of the responders who owned second homes believed that second homes had a positive impact, whilst 39% of those who did not own a second home or a long-term empty property did not share the same view. It was highlighted that this again was a significant increase since the equivalent figure of 27% less than two years ago. It was expressed that 48% of the responders who did not own a second home or long-term empty dwelling did not believe that second homes had a negative impact on local communities at present, whilst only 5% of the responders who owned second homes held this view. 

 

It was noted that there was a clear difference of opinion about increasing the premium between those who owned second homes and those who did not. It was highlighted that those who already paid the premium were not eager to pay more, with less than half of those who did not pay the premium supportive of increasing the premium.  

 

In terms of the responses about the situation with long-term empty properties, it was noted that around three-quarters of responders were of the opinion that long-term empty property had a negative impact on local communities. It was highlighted that 82% of those who owned empty properties objected increasing the premium but it was highlighted that the numbers who responded to the consultation and stated that they owned long-term empty properties, were low. It was emphasised that this consultation sought views and observations in order to assist the Cabinet and the Council to make a decision.  

 

This matter had also been presented to the Governance and Audit Committee for scrutiny. It was emphasised that it was not their role to suggest the level of the Premium, but rather to satisfy itself that the evidence gathered was sufficient in order to make a reasonable decision based on the information. The Head of Finance explained the points raised during the discussion at the Governance and Audit Committee.  Amongst these observations was the dissatisfaction of one member of the Committee about the attention given to the impact on the Welsh language within the Equality Impact Assessment. This member was of the opinion that insufficient consideration had been given to the impact of the premium on the cohort of native Welsh-speakers. It was also emphasised that there was no evidence of the need for 2000 new houses in the Dwyfor area and that there was a need for a comprehensive linguistic impact assessment to be completed. It was highlighted that there was a need to note how successful the premium had been and note how the numbers of second homes and long-term property had changed over time since the Premium was introduced. It was highlighted that one member of the Committee had questioned the morality of charging people from one part of the county to mitigate the impacts of homelessness in other places and he was eager for the report to show housing waiting lists for each ward.  

 

To conclude, the Cabinet Member noted that when making any significant change which affected people, the Council had to consider whether sufficient justification had been gathered to do this, considering the actual impact on the people of Gwynedd. It was explained that the Council needed to act reasonably, based on the evidence. It was noted that there was a theoretical choice to reduce or revoke the premium but it was explained that the money being collected was being earmarked for a specific purpose, which was to support the Housing Action Plan. It was expressed at the same time that very robust justification would be needed to increase the Premium to 300%, and it was explained that the department was not of the opinion that this currently existed. Therefore, after considering the consultation and the current situation in the housing sector, the recommendation was to keep the Premium on long-term empty property at 100% and to increase the Premium on second homes to 150%.   

 

Observations arising from the discussion 

·                Gratitude was expressed for the report and the points raised by the Governance and Audit Committee were highlighted. The regular question raised by a number of responders as to whether exceptions are available if individuals have local connections was highlighted, as individuals who had converted buildings into holiday accommodation after receiving planning consent were concerned that they would need to pay a tax for the first time. It was explained that a statutory exception excluded seasonal dwellings only where planning arrangements meant that they could not be occupied for a whole year. It was explained that a proposal was currently being submitted to adapt the wording to it being able to be occupied for a whole year but that it could not be used as a primary residence. It was highlighted that it was possible to use discretionary exceptions in accordance with Section 13A of the Local Government Finance Act to give the Council the right to adapt the Council tax bill of any dwelling in the county if it could be satisfied that this would lead to social and broader benefit to the taxpayer. However, it was emphasised that the exceptions available needed to give genuine consideration to equality when excluding any dwelling, using this specific legislation.  

·                It was noted that the results of the consultation had highlighted that the situation was not black and white. It was explained that there was an expectation for the consultation to highlight that individuals with second homes would emphasise that we should not charge a premium, and individuals without second homes would tell us to raise the premium to 300% but this was not the case. It was noted that half of the individuals without second homes agreed that the premium should not be increased, as a result of the employment and living of a number of people being reliant on second homes and concerns about families inheriting second homes.  

·                It was expressed that this report was comprehensive, but it was also explained that there was a need to analyse historical information, such as the research into second homes. The main question that needed to be answered was noted, which was how to resolve the problems that existed in communities as a result of second homes. It was highlighted that over 5000 houses within the county were empty for the vast majority of the year, whilst the number of homeless people and people who wanted to buy a house was very high. Nevertheless, it was highlighted that although the Council had the right to raise the premium to 300%, this could not be done without justification. It was explained that raising it to 150% would generate £3m, during a year where the Council had overspent £3m on the homelessness field and where is seemed likely that it would increase again next year; therefore it was highlighted that an increase of 150% was reasonable at present.  

·                It was enquired that although individuals with second homes had received a letter drawing attention to the consultation, it was asked whether this needed to be done for the homeless, those on waiting lists or those who had been unable to afford houses in their communities and it was highlighted that the responses may have been different. It was expressed that an increase to 300% this year was considered to be a bit high and that increasing it to 150% was fair and responded to the problems seen in the field of housing.  

·                It was confirmed that there was an intention to change the statutory exceptions which would mean that any local business with holiday homes where planning conditions restricted them to holiday use were exempt from paying the Premium, but it was noted that Airbnb houses did not need consent. It was noted that a number of these evolved into businesses and as a result paid business rates. It was explained that change was afoot with business rates, noting the need to let the property 182 days a year and if this was not possible, there would be a need to return to paying Council tax. It was highlighted that the Valuer's Office would be responsible for monitoring this.  

·                It was emphasised that hidden homelessness existed across the county with individuals sleeping on sofas or unable to move from their home. The fact that the additional money from the premium would assist the homelessness field was welcomed and it was noted that a regular review would be needed in order to monitor the situation.  

·                It was highlighted that second home owners were not to blame and that a housing crisis could be seen across the county. It was emphasised that there was a need to remind ourselves that this situation was the fault of the Westminster Government, and although the Senedd in Cardiff was attempting to improve the situation it was insufficient and the response was not quick enough. It was also explained that this was an increasing problem that could be seen across Britain.  

·                It was explained that the matter was complicated and things were not black and white, but there was a need to consider all documents and the situation of our communities and the current recommendation to raise it to 150% was sensible at this point in time.