Countryside Alliance Wales has broadly welcomed proposals to reduce the letting threshold for self-catering holiday accommodation, warning that the current rules risk undermining viable rural businesses and the tourism economy by pushing holiday let properties into the more expensive council tax regime unless they are let for unfeasibly long periods.

Responding to a Welsh Government consultation on the classification of self-catering properties for local tax purposes, the Alliance argued that a lower threshold would help protect businesses struggling to meet the existing requirement of 252 days available to let and 182 days actually let each year.

The Alliance surveyed almost 50 current and former holiday let operators to inform its response. Only a quarter of respondents said the existing threshold had had no significant financial impact on their business, while 34 per cent said it had put the future of their business at risk. Nearly half (45 per cent) said a reduction would make the difference between continuing and stopping holiday letting.

Respondents described reduced profitability, lowered investment in their properties and constrained spending with local suppliers. Some were considering selling or closing their businesses, while others highlighted the difficulties of attracting bookings outside the main tourist season, particularly in more remote parts of Wales.

While recognising that some threshold is important to maintaining the overall supply of private homes, which is under especial pressure in rural Wales, the Alliance also questioned whether its current level is making a genuine contribution. Relatively few former holiday lets identified through the survey had subsequently become private homes. The policy, the Alliance argued, must balance addressing housing pressures with sustaining the visitor economy, which is particularly important to rural communities.

The response supports all five exemptions proposed by the Welsh Government, covering accommodation that forms part of a wider business such as a leisure park, large multi-unit properties, properties subject to relevant planning restrictions, accommodation within the curtilage of an owner's home, and properties on the owner's farm. The Alliance emphasised the importance of enabling farm diversification, bringing redundant buildings back into productive use and protecting the viability of holiday accommodation that cannot realistically serve as a permanent home.

It also called for the wider framework to recognise practical barriers to achieving the required occupancy, including seasonal demand, adverse weather, difficult access and the particular booking patterns of larger properties. The response recommends that the Welsh Government investigate whether the threshold could disproportionately affect primarily Welsh-speaking areas.

The proposal is a positive one on the whole, but as with all matters it must be kept under close review to ensure the new threshold, at whatever level it is set, protects viable businesses and the visitor economy while minimising the risk of holiday let designations being used as a form of tax avoidance and curtailing the supply of permanent homes.

You can read Countryside Alliance Wales's full response to the Welsh Government consultation on the classification of self-catering properties for local tax purposes here.