In a significant shift affecting Wales' tourism sector, coastal destinations are experiencing economic challenges following a substantial increase in council tax for second homes. The picturesque region of Pembrokeshire, known for its stunning coastline and charming towns, has been particularly impacted by this policy change.
Pembrokeshire County Council implemented a 200% council tax hike on holiday homes in April 2024, aiming to generate £10.8 million annually. This decision has led to an unprecedented exodus of second homeowners, with many opting to sell their properties rather than face the steep increase in costs.
The impact on local economies has been notable. Matthew Ronowitz, a restaurant owner in Tenby, expressed concern about the situation: "We heavily rely on second homeowners. Their absence is causing significant difficulties for our businesses." This sentiment is echoed across various tourist-dependent areas in the region.
The policy has sparked a debate about its effectiveness in addressing local housing issues versus its economic repercussions. Joshua Beynon, a Labour councillor, defended the measure, stating, "The council's role includes supporting the local economy and providing homes for residents. Early indications suggest more houses are becoming available for locals."
However, the surge in property listings has raised concerns about potential market oversaturation. Rhys Jordan, a local estate agent, reported a significant increase in houses for sale, with many remaining unsold. This situation has led to fears of declining property values in the area.
"The council is making villains out of people who have second homes. It's absolutely haemorrhaging support in our tourism industry. People who own holiday catering businesses have been driven out of business."
It's worth noting that Wales, with its rich history and natural beauty, has long been a popular destination for both domestic and international tourists. The country boasts over 600 castles, more per square mile than any other country globally, and is home to three UNESCO World Heritage Sites. Tourism contributes approximately £6.3 billion annually to the Welsh economy, highlighting the sector's significance.
The Welsh government granted councils the power to increase charges on second homes by up to 300% above the standard council tax rate. Pembrokeshire, having the second-highest number of holiday homes in the country, opted for a 200% increase. This decision has led to what some describe as "grossly inflated" bills, with some property owners facing annual charges ranging from £5,000 to over £12,000.
As the situation unfolds, the long-term effects on Wales' tourism industry and local housing markets remain to be seen. The policy's review, scheduled for next month, may provide insights into potential adjustments or alternative approaches to balance housing needs with economic sustainability in these cherished coastal communities.