Holiday letting in Wales has become a booming industry, with property owners looking to tap into the growing demand for short-term accommodation.
However, navigating the holiday let regulations in Wales is essential for property owners to ensure compliance and maximise their investment. Staying informed about the new rules for holiday lets in Wales will help you avoid penalties and ensure your property meets legal requirements.
In this guide, we walk you through the essential legal requirements for holiday lets in Wales, from council tax to planning permissions, safety standards, and tax implications, to ensure that your holiday let complies with Welsh holiday let laws…
Recent Changes to Business Rates and Council Tax Premiums
As of April 2023, the Welsh Government introduced stricter criteria for self-catering properties to qualify for business rates instead of council tax.
Properties must now be available for commercial letting for at least 252 days per year (up from 140), and actually let for a minimum of 182 days (up from 70).
These changes aim to ensure that properties classified as businesses genuinely contribute to the local tourism economy.
Council Tax vs Business Rates
The taxation of your holiday let depends on how often it is rented out, which is a key aspect of holiday let rules in Wales.
Council Tax: Properties let for fewer than 182 days per year are classified as domestic dwellings and are subject to council tax.
Business Rates: If your property is available for letting for at least 252 days and actually let for a minimum of 182 days, you may qualify for business rates instead of council tax.
Some owners may also benefit from Small Business Rate Relief, which could reduce or eliminate business rates.
Local councils also have the discretion to charge a premium of up to 300% on second homes not in regular use, which is an important consideration for owners renting their holiday lets part-time.
Tax Implications for Holiday Let Owners
In addition to business rates and council tax, there are tax implications for holiday let owners in Wales that should be considered.
If your holiday let meets the criteria for a Furnished Holiday Let (FHL), you could benefit from favourable tax treatment.
How to qualify for FHL status:
- Your property must be available for letting for at least 210 days per year.
- It must be let for at least 105 days (excluding longer-term lets of more than 31 consecutive days).
Benefits of FHL status include:
- Capital gains tax reliefs, such as Entrepreneurs’ Relief and Rollover Relief.
- The ability to claim capital allowances on furniture, fixtures, and equipment.
- Eligibility for pension contributions based on your FHL income.
Consulting with a tax adviser is crucial to ensure you meet the necessary criteria and maximise your tax benefits under the new rules for holiday lets in Wales.
Welsh Tourism Registration Scheme
As of December 2024, Wales does not yet have a mandatory registration or licensing scheme for holiday lets. However, the Welsh Government has announced plans to introduce a statutory registration and licensing scheme for all visitor accommodation.
The first phase will involve establishing a registration process, followed by a licensing scheme focused on safety compliance and quality standards. You can read more about this on the Welsh Government website.
Currently, property owners can participate in the Visit Wales Quality Assurance Scheme, a voluntary initiative that independently assesses and rates holiday lets. This scheme helps increase your property’s credibility and online visibility.
Stay updated on future changes to holiday let regulations in Wales as the Welsh Government continues to develop the licensing and registration schemes.
Planning Permission for Holiday Lets
Before converting a residential property into a holiday let or purchasing a property for this purpose, it’s crucial to understand the planning requirements for holiday lets in Wales. These requirements can vary significantly between local authorities.
Change of Use:
Recent changes to planning rules introduced three new use classes:
- Primary Home: A main residence.
- Secondary Home: A property not used as a primary residence.
- Short-Term Holiday Accommodation: Properties intended for short-term lets.
Some regions, such as Pembrokeshire Coast National Park and the Gower Area of Outstanding Natural Beauty (AONB), have stricter regulations. Local authorities may require planning permission for converting a property to a second home or holiday let, especially in these popular tourist areas.
Consult with your local council to determine whether planning permission is needed for your holiday let project, particularly in high tourism-impact regions like South Wales.
Health and Safety Regulations
Safety is a key concern for all holiday let owners in Wales, and several health and safety regulations must be followed:
- Gas Safety: Properties with gas appliances must have an annual safety check by a Gas Safe registered engineer.
- Electrical Safety: While there’s no legal requirement for periodic electrical inspections, it’s important to ensure that your electrical system and appliances are safe. Regular checks by a qualified electrician are recommended.
- Fire Safety: Under the Regulatory Reform (Fire Safety) Order 2005, you must carry out a fire risk assessment and equip your property with fire safety measures (e.g., smoke alarms, carbon monoxide detectors).
- Legionella Risk: Property owners must assess and manage the risk of Legionnaires’ disease, particularly by maintaining water systems.
Adhering to these health and safety standards is a critical part of the holiday let regulations in Wales, ensuring the safety and well-being of your guests.
Insurance Requirements
Standard home insurance policies rarely cover holiday lets, so it is essential to have the right type of insurance to protect your property and guests. Key policies to consider include:
- Public Liability Insurance: This covers legal costs and compensation claims if a guest is injured or their belongings are damaged during their stay.
- Employer’s Liability Insurance: If you employ staff to help manage or maintain the property, this insurance is a legal requirement and protects you if they become injured while working.
- Buildings and Contents Insurance: Holiday lets are often more prone to accidental damage than residential homes, making it essential to have comprehensive buildings and contents cover that includes guests.
- Loss of Income: Some insurance policies offer coverage for loss of income if the property becomes uninhabitable due to events like flooding or fire, providing valuable financial security.
Marketing Regulations
If you are advertising your holiday let, especially through third-party platforms, you must ensure that all marketing complies with consumer protection laws.
- Accurate Advertising: All descriptions and photographs must accurately represent the property and services offered. Misleading or false claims can lead to complaints, negative reviews, and potential legal action.
- Terms and Conditions: Ensure that your cancellation policies, check-in times, and other essential terms are clear and transparent. Guests must know what to expect and what is required of them during their stay.
- Compliance with GDPR: If you collect personal data from guests, such as names, contact details, or payment information, you must comply with the General Data Protection Regulation (GDPR). This includes storing data securely and only using it for legitimate purposes.
At Coast and Country Holidays, we handle all aspects of your marketing, ensuring full compliance with the latest regulations so you can focus on what matters most—your guests. Contact us today to discover how we can help streamline your holiday let business and maximise its potential.
Holiday letting in Wales can be a lucrative and rewarding venture, but it comes with a range of legal obligations that property owners must meet. From planning permissions and taxation rules to safety regulations and insurance, each aspect must be carefully managed to ensure compliance and protect both your investment and your guests.
By following this guide and staying up to date with the evolving regulations, you can operate your holiday let confidently and successfully while providing a safe and enjoyable experience for visitors to Wales.
Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.
As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
As a holiday letting owner you are responsible for compliance with health & safety laws, regulations and guidance, and for having suitable insurances in place (not Sykes Holiday Cottages or its brands). From time to time, Sykes shares information with you on the topic of health and safety and insurance. When it does so, it is not providing you with advice (legal, financial, tax or otherwise); please seek your own as you see fit. In addition, it is not making any representations or warranties about the information being complete or free from errors or inaccuracies. Sykes shall not be liable for any loss or damage arising under or in connection with your reliance on it.
