Pembrokeshire Council’s recent decision to reduce the council tax premium on second homes from 200% to 150% marks a significant shift, particularly in a region popular for holiday lettings. This comes just six months after the higher 200% rate was introduced and contrasts with the broader trend in England and Wales, where councils have sought to impose steeper premiums on second homes to address housing shortages and the impact of holiday lets on local communities.

The amendment, proposed by independent councillor Huw Murphy, passed with 30 votes to 26. Supporters argued that the 200% premium led to a surge in properties for sale, many of which were not suitable for local buyers due to being small one- or two-bedroom apartments. Councillor Rhys Jordan, one of the voices behind the reduction, highlighted that the high premium had been introduced too hastily and had negatively impacted the tourism sector. He cited a 40-60% reduction in business for local hospitality and tourism operators, adding that the area had been much quieter this season.

In addition to reducing the premium, the council agreed to request that the Welsh Government lower the 182-day occupancy threshold required for self-catering properties to qualify for non-domestic rates, a move that could further benefit holiday let owners.

The decision has sparked mixed reactions. While some, particularly in business, have welcomed the relief from the 200% premium, others argue that the reduced tax might not adequately address housing challenges faced by locals. In contrast, many councils in Wales and England continue to lobby for higher premiums on second homes to address local housing affordability issues exacerbated by the rise in holiday lettings.