A new legislative proposal known as the "182 Rule" is set to have a significant adverse impact on furnished holiday lets and self-catering accommodation providers across Wales. This proposed regulation is intended to reduce the number of properties bought as second homes or short-term holiday lets which politicians believe are preventing locals from owning properties in their areas and impacting their local communities. However, the legislation brings significant danger to tourism businesses which could, as a result, face significantly increased overheads as a result of the loss of their business-rated statuses and rural rate relief.
What is the "182 Rule"?
Under the 182-Day Rule, holiday let properties must be occupied for a minimum of 182 days per year to qualify for business rates. Failing to meet this threshold will result in the property being subjected to the "Second Home Premium" council tax rate (a potential 300% increase) and loss of rural rate relief of 100% if the rateable value is under £6,000pa. Many tourism businesses are expected to fall short of the 182-day requirement, leading to these significant additional financial burdens. Currently, the only exemption from the 182-Day Rule applies to properties where planning permission restricts their use to holiday lettings.
Lobbying for urgent review
Together with the Professional Association of Self-Caterers (PASC) and other tourism associations across Wales, we have been actively lobbying the Welsh Government for an urgent review of this legislation. We have voiced strong opposition, emphasising the difficulties it poses for landlords as we see the new target as almost impossible for many properties located inland or in rural areas of Wales to meet. We are also urging for additional exemptions to prevent an exodus of businesses from the sector.
Rising cost-of-living crisis worsens the situation
Landlords are further burdened by the ongoing cost-of-living crisis, which compounds the challenges of adhering to the 182-day rule. In response to these difficulties, there has been a collective call for reconsideration of the occupancy requirement.
PASC survey highlights the struggle
PASC launched a Review 182 campaign calling on the sector to petition the Government against the proposed legislation. To support its campaign, it conducted a comprehensive survey involving over 1,500 respondents, who shared the challenges faced by the industry.
Approximately 49.33% of participants managed to meet the 182-day occupancy requirement last year. However, this came at a cost, as 70% of respondents had to lower their prices to attract bookings, making it increasingly difficult to maintain viable businesses.
More concerning is that only 25% of survey participants anticipate meeting the 182-day threshold next year. If the policy remains unchanged, it is expected to have a devastating impact on the tourism sector, which plays a crucial role in the rural Welsh economy. An alarming 42% of PASC survey respondents are contemplating putting their properties on the market in response to the new policy. If the forecasted 25% compliance rate is realized next year, more property owners may consider selling their assets and leaving the sector.
We will continue to lobby the Welsh Government on your behalf and support the efforts of PASC Wales and the many other organisations working to represent the views of accommodation providers across Carmarthenshire and Wales. We will keep you informed via our newsletters and social media posts as the campaign progresses.