Discovering Wales: A big welcome to holiday makers, but holiday let owners, your commitment counts
With the arrival of spring, we see Welsh market towns come alive to welcome the bustling tourism season they so heavily depend on. Local analysts and property consultants keenly monitor the shifts in the local property market and the growing influence of regulations and laws that shape it.
The COVID holiday boom is fading into deep memory, yet it posed a significant challenge for policymakers in the housing sector. The holiday rental market, driven on by an open free-market, saw a dramatic increase in demand for holiday space in the UK met by an obliging supply. Across our picturesque destinations, property prices remained resilient and lucrative furnished holiday emerged as a promising avenue for second-home owners and investors.
New laws and Local Authority powers have developed and are slowly integrating, relatively anonymously, into this industry. Efforts have been made by national Governments to protect our rural communities while ensuring that local economies continue to reap the benefits of leisure and tourism.
There are a few subtle technical areas of this market to be aware of and taking some advice can help save the cost of a simple misstep.
In Wales, to qualify for Business Rates and have access to the lucrative Small Business Rates relief, a furnished holiday let property must be available for letting for a minimum of 252 days annually (previously 140 days), and physically booked for 182 days (previously 70 days). This requires property owners to commit to a full-time holiday business to be deemed commercial in nature. Meeting the minimum stay criteria is not easily achieved in what is now a developed and competitive market. A poor booking season may result in the property being classified for council tax, potentially subjecting the owner to a heavily inflated council tax bill.
Further regulation is on the horizon including a national register and Licensing scheme aimed at maintaining safety and quality standards across Wales. Amendments to the Planning regulations have already been made, splitting the definition of “residential” property. In regional areas that are given a specific designation status, a planning application will be required to convert a property from residential to a second home or short-term rental use.
The new rules, regulations and red tape might seem a natural course for an industry which has such significant cultural and economic consequences. Few areas of the rural property industry have seen such recent intervention, save for the reform of the agricultural subsidy scheme. We advise our clients wishing to seek, harness and develop a mixed asset rural portfolio. Feel free to contact us if you'd like to discuss any of the related matters further.