New rules that enable councils to double council tax for second homes are now in effect in England but the consequences of doing so are only now becoming apparent in Wales, where many councils are having to backtrack on rises, it has been claimed.

The Welsh Government ruled last year to allow local authorities to charge a substantial council tax premium for second homes to prevent locals from being pushed out of holiday hotspots.

Councils took advantage

As reported by The Neg, many councils immediately took advantage of the changes, hiking council tax by as much as 200%.

Now, a report by The Telegraph has revealed the damage that is being done not just to house prices but also to local incomes and businesses.

Its report focuses on Tenby, a pretty seaside town in Pembrokeshire where over a quarter of the properties are second homes.

West Wales Property Finders’ buying agent Carol Peett told the paper that hundreds of properties have been put on the market during the past year: “I have been absolutely swamped with it. In Tenby, there are just so many houses on the market.”

As a result, over the last 12 months, prices have slumped by 8.9% in Pembrokeshire, according to Principality Building Society, although the falls were even more pronounced in Gwynedd, where prices plummeted by 12.4%.

Locals not happy

Joshua Beynon of Pembrokeshire County Council called the price falls ‘positive signs’, but many locals disagree, claiming they will never be able to afford the type of high-end waterfront houses coming onto the market, which will just end up empty and unsold while tourist numbers and incomes decrease.

The wages have never been high enough to get a property in the town.”

Second homeowners David and Hilary Thomas, who have just sold their one-bed flat, told The Telegraph: ”Not a single local couple went and looked around it. Can you believe that? It was £120,000. You would think that was a good starter flat”. It was eventually sold to someone who is planning on letting it out.

Falls in house prices affect local residents, too, who are seeing the equity in their homes plummet. At the same time, their incomes are also dropping, with many shops and businesses reporting revenue is down by as much as 50%.

One in five jobs in Pembrokeshire are in tourism, as well as a whole host of electricians, plumbers and cleaners whose income depends on second-home owners. Many of them are now directing their anger and frustration at the council, which they have forced into reducing the council tax surcharge from 200% to 150%.

It has not, though, put off English councils, 75% of whom have now put in place a 100% premium on second homes.