Local Government and Housing Committee

Item 2, then, on our agenda today is a further evidence session, our third evidence session, regarding our inquiry into second homes, and I'm very pleased to welcome Jano Williams, who's a councillor with Newport Town Council; Councillor Jeff Smith of Aberystwyth Town Council; Councillor Rhys Tudur of Nefyn Town Council, and Councillor Dyfrig Siencyn, joint chair of the Welsh Local Government Association rural forum and joint WLGA spokesperson on rural affairs. Welcome to all of you, and thank you for coming in to give evidence to committee this morning.

Perhaps I might begin with a few initial questions, before we turn to other committee members, and, firstly, a general question on the impact, so, the economic, the cultural, the social impact of second homes, holiday homes, short-term lets—the impact that they have on rural communities, including of course the impact on the Welsh language and the affordability of housing. So, just a general question about overall impact, really. Who would like to begin? Jano.

Newport, Pembrokeshire, I expect you will know, is a very small seaside town, very attractive to tourists and so on. I don't have to explain that, but the cultural, social and economic impact has been that houses that are in the centre of town—it's historically a very beautiful town—are way too expensive for local people to buy, and so, what is happening is most of our young people are moving out. Well, no, that's an exaggeration: a lot of our young people are moving out to other areas. The impact of that on the language is that we have a school that teaches through the medium of Welsh, and so, obviously, with fewer children the school is at risk.

Culturally speaking, it's more difficult to pinpoint, but I think, culturally speaking, the old—. There has become a kind of—. If I say 'divide', that's quite strong. There's a lot of sensitivity from the people who were born and raised here, who have been here for many generations, seeing the homes for the next generation being taken away, and there is a resentment between that kind—. It's a justifiable anger that their children can't buy houses. It's not just about renting houses; they can't buy houses in the area and in the town.

The economic impact is more difficult, because Newport does depend very heavily on tourism. Obviously, that's a more modern thing, but without the tourists, without the holiday lets and so on, Newport would go through very difficult times and the impact on the community in the wintertime would mean that there are no shops—all of the things and businesses and so on that are linked to that, and work. So, it's a very complex problem in Newport. We have the visual impact as well—the design of any houses that are being built. We have a lot of market houses financing the affordable housing. But those things are going to come up later on, I'm sure.

Yes, absolutely, Jano. We will get on to all of that, but thank you for those initial thoughts. Would any witness like to add to that? Jeff.

Thank you, Chair. In Aberystwyth, many people find it difficult buying or even renting somewhere to live. House prices on average have gone up to nine or 10 times the average wage, which is, of course, a major problem if you consider that mortgage providers and banks and so on are only willing to lend up to 4.5 times your wage. So, people do find it very difficult to remain in the local area. That's also true across Ceredigion as a whole, where prices have risen around 19 per cent between October 2020 and October 2021. My wage hasn't increased by that amount over that period, and I don't think anybody has received a pay rise to correspond with how quickly house prices are rising.

Speaking about the Welsh language, it's worth noting that there are a number of communities in Ceredigion that have seen a significant decline in the number of people who are able to speak Welsh over the past few years. Last year's census results aren't out yet in terms of the Welsh language, but between 2001 and 2011 the percentage of people in Aberystwyth who were able to speak Welsh had declined by 5 percentage points, with 8 percentage points in one ward alone. It's worth us noting that 5,200 Welsh speakers leave Wales every year, and the economic reason is one of the reasons for that. That's not to mention the outward migration from the more Welsh-speaking areas to places such as Cardiff. This 5,200 are those who, to all intents and purposes, are missing in terms of reaching this goal of a million Welsh speakers and to fulfil Welsh language services in Wales.

If I may say so, this policy area is very relevant to other policy areas of the Welsh Government. For example, the Welsh Government wants to attract more Welsh speakers to teach through the medium of Welsh, they want more nurses who speak Welsh, and these are some of those people who do find it very difficult to afford a house in areas where the Welsh language is still spoken as a living community language—places such as Aberystwyth. So, this cuts across a number of policy areas within Government.

Diolch yn fawr, Jeff. Rhys. Rhys, you're muted at the moment. That's it.

Can you hear me now? Thank you. I'll just say that the impact is very damaging on communities. What we see here in Morfa Nefyn is that there's a percentage of 30 per cent of the housing stock that are now second homes, and that's had a huge impact on house prices. It's a very attractive place for those who want summer properties. The village is called 'the next Abersoch', which has a higher percentage still of second homes. What it means is that young people can't live there at all, and they're local young people, of any profession—they find it difficult to live in that area. If you're a young couple, what you also have is the difference in prices between those coastal areas and more inland areas.

For example, you have Nefyn and Chwilog, which are about 8 miles apart, although Chwilog is more than a mile away from the sea. It's not a stretch to say that the same houses are £100,000 cheaper in Chwilog. The result of this is that you have a retreat in the area where people speak Welsh. In those tourists areas, you won't have the Welsh language being spoken, and that would be a disaster. That's what we see at the moment as a pattern. There's been a decline in the number of children going to the school in Morfa. There have been forecasts undertaken by school governors that show that there's going to be 10 fewer pupils over the next few years. That's a huge hit to the community and the confidence it has in sustaining itself.

In Morfa you have a cross section of different kinds of tourism. You have caravan parks—which I consider to be tourism ventures that are more sustainable, perhaps, and more beneficial—and you have summer homes and you also have holiday homes, and that means that people are excluded from the housing market in that area. What we don't have in Wales is something that identifies the more beneficial kinds of tourism and those kinds of tourism that are more damaging. It's a shame that we haven't got that clarity at the moment.

Diolch yn fawr, Rhys. Dyfrig.

Thank you very much, Chair. My first reaction to the question is that the answer is entirely clear. In the town where I grew up, Dolgellau, there are entire streets almost that are now summer homes or short-term holiday lets, which, of course, transforms the nature of the society and our communities. It empties out our villages and towns. And, of course, that does have a far-reaching impact on the nature of the society. Because we are an area where the Welsh language is the primary language, then it naturally has an impact on the Welsh language, as others have referred to. It's significant: if you look at the percentages of Welsh speakers in Gwynedd, for example, the areas where tourism is the primary industry, so those coastal areas, are where the Welsh language at its weakest. I think that is relatively robust evidence that there is significant damage being done to the Welsh language and our culture as we allow this market to develop without any kind of controls on it.

As others have mentioned, buying a small house in a beautiful town in rural Wales is an excellent investment, when you get, I don't know—. Let's say you have £600 a month rent for a long-term let, where you'll get £600, at least, a week if you let it as a summer home. So, you can see that this is an excellent investment. I would like someone to undertake some sort of research into what the percentage return is on buying a property in these areas. And, of course, it takes away a significant percentage of the housing stock out of the stock for local people, and that has a truly far-reaching impact. So, that's what I would say in response to that question.

Diolch yn fawr. Thank you all very much. A further question from me, then, in terms of the Welsh Government's response to these issues generally and in terms of the pilot area in Dwyfor. What thoughts do you have on that response, whether it's the pace, the scale of what's proposed, or anything generally? What do you think? Is it what's needed, or should Welsh Government—? Dyfrig.

I'll come in there, because we are collaborating with the Welsh Government on this pilot scheme in Dwyfor. May I say in the first instance that the steps that Government has taken are historic ones? This is the first time that a Government has made any kind of effort to intervene in the summer home and second home market, and that is to be acknowledged in the first instance. The pilot scheme I would describe as a young child learning to crawl at the moment. We have had some four or five meetings amongst officials. I'm not part of those particular meetings. I think that they are seeking a way forward, and Gwynedd Council is very willing to give as much guidance as we can, but I think there is scope for the Welsh Government to refine its ideas in terms of what is included in the pilot programme.

The things in the pilot I would describe as relatively soft interventions. We've had relatively recently a list of the scope of the pilot programme. They are actions that add to the work that the council is already doing, and that's certainly to be welcomed, and we are very pleased to receive any additional support to seek solutions to the problem. There is mention made of appointing a pilot programme manager; well, that, of course, needs to be done as a matter of urgency, and that would be a major help in my view in terms of moving things forward. So, there is an element of frustration, but I do understand that this is a complex area and we need to do this work thoroughly. But the message that I would take back to the Government is that we need a bit more urgency, a bit more refinement of the ideas, and more ideas of what to include in the pilot programme.

Diolch yn fawr. Jeff.

Thank you, Chair. To some extent I echo what Dyfrig said, that there is an element of frustration, and we do need to take more swift action. But it is excellent that the Government does want to take steps in this direction. We're very pleased about that. Councils have been calling for these steps to be taken, and we're pleased that something is about to be done. I have to say that I am concerned about the measures in terms of change of use, where you need to prove the problem at a micro level in the research, and then use article 4 to come to the point where a county council can refuse applications for change of use from C3 to C5 or C6. This requires a great deal of work, and it looks like something that will take a great deal of time. But, more than anything else, it looks like something that needs to reach a peak in terms of being a problem before anything can be done about it. So, whilst we support entirely the creation of these new use classes, it would be good within the action to see something more proactive where councils can at least make a decision on a county level that they want to control and manage the second homes market in their areas and consider each application to move from C3 to C5 to C6 as part of a planning application, if they so wish. I think that that power should lie with county councils rather than their having to jump through these hoops on very micro levels. So, these are some of my concerns about how this issue has been set out. But, to conclude on a positive note, we are very pleased that the Welsh Government is doing something about this.

Okay. Diolch yn fawr. And Rhys.

I'd like to echo that I've been very much encouraged by what has been put forward in the consultations. There is a wide range of proposals, which, in my view, are going to have a genuine impact on our communities if they were to be implemented. I feel slightly frustrated about the speed of the process. I understand that consultation takes some time, but I would have liked for them to have commissioned that sooner.

In terms of the pilot, I firmly agree with what Dyfrig mentioned earlier. I'm concerned that a pilot will put forward those soft solutions, rather than implementing what has been put forward in the consultation itself. Why do we need a pilot in the first instance? Well, for me, the reason to have a pilot would be to trial those things that would have a genuine impact and make a genuine difference in communities to keep them alive. In Dwyfor, for example, people could argue that the second homes issue is at its most intense. Gwynedd has the highest percentage of second homes, and Dwyfor—I'm not entirely sure of the figure, but I tried to do the sums—has around 40 per cent of the second homes throughout Gwynedd. So, even though it's a third of the area, there is a higher density there in terms of second homes, as compared to other places in Wales, it could be argued. and there's a high percentage of Welsh speakers there.

So, the pilot should be an opportunity to trial measures that will make a real difference, as proposed in the different consultations. And that's what I hope will happen, rather than the soft steps of allocating funding. And the funding that has been allocated so far isn't anywhere near enough to conduct a pilot and make a genuine difference, in my view. Around £1 million has been earmarked for Dwyfor, as I understand it, and much more is needed to make a difference through different projects. But, rather than just making investment, planning restrictions should be put in place, as raised in consultations.

Okay, diolch yn fawr, Rhys. Thank you very much. Jano.

I think it's very appropriate to have a pilot study, and I think that's a good idea. I also think that every community has its own individual problems. And I think, for me personally, one thing that isn't being addressed is the power of developers, because, in Newport, a piece of land will be going for a huge amount of money. The developers have to make a profit, so they are following the planning regulations and building enough houses to make their profit and squashing the affordable houses into the corner. And the other thing is also the issue that, if we address only the second homes and only the holiday lets, in Newport that would have a big impact because that is our business, that's how we survive. And I would be very concerned about any unintended consequences from that. So, I would like to see more emphasis on enabling a community, giving more power to the town councils. We are in the national parks. The national parks are our planning authority. We feel very powerless in the face of planning decisions that are made in the national parks, and I think that what we need to be doing is addressing the problem of enabling communities to be able to buy the land, to build the houses they need for the local people, the young people, and also not just to let but to buy. We have young people in Newport who have good incomes who can't afford to buy in Newport because the prices are exorbitant. They've gone up from—. A house, say, of £68,000 20 years ago is now £700,000. It's ridiculous.

So, I think that there's too much emphasis on putting pressure on keeping the number of second-home holiday lets down, which is great and I think we should have a limit, but that doesn't bring down the prices. Unless you're really draconian, you're not going to bring down the prices of the land. You're not going to address the needs for building the right houses for the young people who need homes, because the affordable houses that we have had built in Newport are on—. There's one particular building development that has a whole raft of big, executive houses that are not in the vernacular of Newport, not on the kind of streets that we have historically in Newport, and in the corner, separated off, we have a little block of small, affordable houses for rent. Now, they're open for rent for the local community for a number of years, but then if they're not taken up, they go to people from outside the community, which I can completely understand, but we need to get to the core of the problem that we, in Newport, need to be able to build houses for old people who need single-storey dwellings, for young people who've got families, for young couples, smaller units.

There's got to be a two-pronged attack to this, because, otherwise in Newport, we restrict the number of second homes, we restrict holiday homes, or we reduce them or whatever. That will affect the economy of Newport, and it won't stop the young people leaving, because they have nowhere that they want to live. Houses with gardens; we don't build affordable houses with gardens because the land price is at a premium, and the developers want profit. And I have to say that the developers have the power in this, and they push and they push and they push until they can get bigger houses, more houses. They take away the smaller houses that were a kind of treat for the planners. The local town council feels powerless. The pressure from the developers is huge, and I think we need to take the land out of the hands of that profit motive. We need to be able to empower communities to buy the land to build the houses they need, and no market houses. Don't finance with market houses, as we do in our planning authority. We finance the affordable houses by getting developers to build market houses, so they're in there for the big bucks. We're talking about a field in Newport costing £1.5 million. Now, no-one can buy that. And the other thing we have is sites within Newport. If there's a house on a site in Newport with enough land, somebody will buy the house, then they will apply for planning permission for market houses, and we can do nothing. And I think the thing that's making people so angry in Newport is that we feel powerless in the face of the planners, the developers and the profits that can be made here. We need to actually start addressing how we can build houses to buy, maybe with restrictions on them, houses to rent, because the people who are moving out are not poor people; they're people on good wages, and they're the people who could bring business to Newport to turn it around so that we can move away from tourism. But it's not possible at the moment. Thank you.

Thank you very much, Jano. I think Dyfrig wanted to come back in. Dyfrig.

Thank you very much, Chair. I just wanted to come back to the pilot programme. One part of the pilot is the registration or licensing project for short-term holiday lets, but that's on a voluntary basis. I'm not of the opinion that that will be successful, personally. I genuinely believe that, as part of the solution, a statutory compulsory registration regime is what is needed and not a voluntary one. That's an important point to make, I think, and actually it's very important, because I think that's the most powerful tool that we have in order to control this issue.

And on the consultation on changes to planning legislation, I consider that to be a wider aspect than the pilot programme, truth be told, because, if it is implemented, it could be implemented anywhere across the county through changes to article 4. I'm not sure whether we should limit that to the pilot programme, truth be told. I think it would be possible to implement it wherever that may be.

So, just those points, and I want to emphasise the fact that the registration and licensing regime sit alongside changes to planning legislation, and changes to the taxation regime, and I'm sure we'll have a question on that in a moment. I think that the registration process, or licensing, is a very important tool that will enable local authorities to act. Thank you.

Thank you once again. Rhys.

Just to add a brief point to what Dyfrig said, where I am of the same view, we do need to have a system of compulsory registration. We have that with our landlord-tenant housing. We have Rent Smart Wales, which oversees this particular field to ensure that every landlord is registered, or otherwise they get into difficulties. We want the same process for holiday accommodation, which is that you need a licence to run holiday accommodation. And if we had a body such as Rent Smart Wales to administer that and to license, that would remove the burden from local authorities. Rather than local authorities having to analyse, 'Is this holiday accommodation or not?', what they would do then is ask, 'Do you have a licence?'—from that new body. I would like there to be a 'self-catering accommodation Wales' body, for example, which would undertake the regulation and licensing. So, if your property isn't licensed, you would pay full council tax. At the moment, there is an exemption, and that's not fair in itself. There should be a licensing system that would lighten the burden on local authorities.

Okay, Rhys, thank you very much. Okay, we'll move on to other committee members. Firstly, Mabon ap Gwynfor. Mabon.

Thank you very much, Chair, and thank you very much to all of you for attending this morning and giving your time as witnesses to committee. To begin with, I just want to pursue the definition of second homes. You've referred in your evidence to second homes, to holiday homes, and to short-term holiday lets. Do you believe that the definition of what is a second home or short-term holiday let is sufficiently clear, and how would you define and differentiate between these different types of second homes, including this new element in terms of Airbnb?

Dyfrig.

Yes. It is important to have a definition. That is, if you have a planning regime where you have to make a planning application to change from one category to another, then you have to have a very clear definition of what a second home is, and so on. It isn't as easy as that. That's why, perhaps, we need to have this discussion and debate, particularly with regard to planning. There are several categories, aren't there? There is a second home that isn't let as holiday accommodation. There are homes that are let as short-term lets without any kind of regulation, through Airbnb, for example, and the growth in that direction has been extraordinary, truth be told. And, of course, there are holiday homes that have had permission, for example, to turn outbuildings into homes to be holiday accommodation, and there are planning restrictions on them and so on. And I believe that holiday accommodation is clear; it's part of the planning regime, but in my opinion, they don't detract from the housing stock.

The difficult one, of course, is if you define a primary residence as, well, let's say, somebody has to live there for a number of days in a year—yes, the number of days would be the measure, I would think—it's difficult to police that, isn't it? It's very difficult for any planning authority to gather evidence of how many days in a year a property is used or not.

So, it is an important area to consider, and I think that that discussion is ongoing. But we do have to have that clear definition, I believe. I believe I've seen a definition of a primary residence as where one person lives continually. And that could be year-round, rather than somebody having two properties, and that they then select which one is their primary residence for taxation purposes and so on. Let's be clear, you have to live there all year long. That could be a definition, but that's something to discuss.

Rhys.

In terms of the definitions, it is vital to set them out, because it isn't clear at the moment what the difference is between them. You have some kind of definition in terms of taxation, but not in terms of clear use classes. What has been proposed in the consultations is satisfactory in terms of the clarity that they provide, but I agree that they don't go far enough in terms of setting out the criteria for a second home. As Dyfrig said, a primary residence should be defined as somewhere that you live full time, and that definition then would make it easier for county councils to be able to decide what counts as a primary residence and what counts as a holiday residence. That's vital. Definition is a vital step in order to regulate second homes, because that is the outcome that I would like to see—regulation and some sort of threshold being set on the numbers of them.

I lost the opportunity last time to talk about how I feel about mention being made of affordable housing. My opinion on that is that we can't build ourselves out of the housing crisis. Affordable homes—. If you want to build affordable homes in a rural area, they would change the character of those communities, having too many homes in a village where there haven't been that many before. In Llŷn, for example, we have an area of exceptional natural beauty and very small villages, and it's been like that for years, and it wouldn't make sense to build a host of new affordable homes there. What needs to happen is that they have to regulate and control the number of houses. There are plans such as self-build in building more homes; it won't happen quickly enough to be a solution to this crisis to meet local need. And that's the problem that we're facing. We need to regulate. It's not about building a whole host of new homes, especially in rural areas. And if we build more homes in urban areas within those rural areas, then there is a danger that people will leave those rural villages for the towns, and that's a problem in itself.

So, regulation is important, and defining the categories is a starting point in that direction, and it's a vital point to make.

Okay. Thank you very much. Mabon.

Thank you very much for your responses. In terms of considering those different definitions and the different kinds of second homes, Jano in Newport talked about the economic value, in terms of tourism, of second homes. Is there a different kind of economic value to different kinds of second homes in our communities and rural economy? So, a second home in the sense that somebody owns it but only goes on their holiday for a few weekends in a year, that's one kind of second home; short-term holiday accommodation is a different kind; unregulated accommodation; a barn that's been converted on a local farm. Those different kinds—do they have different kinds of economic worth, and do you support some at the expense of others?

Jano.

Yes, of course. If you have a—. I think this whole definition of second homes things is problematic. I think there are—. In terms of avoidance of the tax, I think it's important that we do this. But, yes, in answer to that, there is a difference. People who have a lovely second home and just use it for their family are obviously not going to be bringing in so much money to the economy as people who have holiday lets, because there's a constant turnover. Newport becomes alive, I could say, packed, in the summer, but that's what keeps our businesses going. So, they do have a huge benefit. Obviously, I think there is a tipping point. I think we might have reached the tipping point in Newport; we have, possibly, 50 per cent. But there are hidden second homes: people, couples, who have registered a home in London, and the other partner has registered the home in Wales—that kind of second home.

But in the winter, there are streets that are completely dark because nobody is there. The economic effect in the winter—. The only way we can get through the winter, that businesses can get through the winter, is knowing that that income is coming in in the summer. We restrict second home usage and blame second home usage at our peril in Newport. I don't know about other communities. And that is why I say each community has to be looked at, and the councils have to be involved in communication, with the planners and with any decisions that are made, which tailor it to their needs. Because our needs may be different from other places' needs.

So, the answer is, yes, they are our lifeblood. The businesses are very—. Some of the business people I've talked to are very concerned that the report and all of the attention at the moment is on second homes being the problem. Yes, they are a problem, they have caused the rise in the prices of houses. We have a lot of people—. A very large proportion of our population is elderly—they haven't got second homes, they come down here to retire. They might buy a second home and retire here. That in itself may be a larger problem, in terms of the language and the culture of Newport. So, the definition of second homes is tricky.

And there's one other point. There are people in Newport who've had a house in their family for generations—Welsh speaking, people for whatever reason have moved away, and they are being charged the second home tax, and they are very angry about it, because it's their family home. If they can't afford to do that, they're going to sell their family home, and it's going to become a second home. So, I would like some attention paid to that—I don't know whether it's possible or not. But they fall under the definition of second home owners, but they are local people.

So, the definition of second homes is important. But the second homes and the holiday lets are important to our economy, and that needs to be done very, very carefully, if that is going to be the sole focus of this study.

Okay. I think Rhys wanted to come in there. Rhys.

To try to answer the question, there could be more benefit in holiday accommodation than in terms of second homes. And the reason for that is, well, if the criteria were to apply to a holiday accommodation so that there was that turnover attached to it, rather than one family using it only on weekends, then there would be benefits to that, because there would be different people using it. And the alternative to that is that you have one property that's used by one family, that's used for less time in a year. But at the moment, the criteria that we have for use of holiday accommodation are very low, and it doesn't encourage sufficient turnover in terms of use by different people throughout the year. In my view, holiday accommodation should be accommodation that is used for over 200 days a year, or more possibly, so that that is a minimum. At the moment, what we have as criteria is that you have to let it for 30 days and offer it for up to 140 days. Well, that just isn't enough. And it allows, perhaps, a family who actually uses it as a summer home, for example, to get tax relief because of that use. And so that in itself damages our economy in an indirect way. So, holiday accommodation should have more economic benefits than a holiday home, but, again, that process could be improved. But both kinds of accommodation do exclude local people from the housing market. In my opinion, some houses should not be able to be holiday accommodation or holiday homes, because they eat into the housing stock that we have.

What we have in Nefyn, as a recent pattern, is that houses on the high street turn into holiday accommodation or holiday homes. And that has been pretty unprecedented in terms of previous years. It is clear that people are turning their accommodation into Airbnbs and they are buying all kinds of different properties and not just detached houses on the seafront.

Okay. We've taken up quite a lot of the available time already on this, on the initial questions, so we're going to have to speed up a little, although I'm sure much of what has been said is relevant to later questions, in any event. Dyfrig, did you want to add anything?

[Inaudible.]—is an extremely complex one. I'm not an economist, but, of course, housing lets are important to the economy of rural areas—there are no two ways about that. But it comes back to the question of sustainable tourism, doesn't it? We have to strike the balance. That is, if we have too many visitors—just in terms of numbers—well, it has a detrimental impact on communities and on our culture and so on. But, of course, we have to acknowledge that there is room for holiday lets in rural areas and that's important to acknowledge. I'll leave it there.

Sure. Okay, diolch yn fawr. We move on, then, to Sam Rowlands. Sam.

Thank you, Chair. Good morning, everyone. Thank you for your time this morning, it's really appreciated. I think a lot of what I was going to ask has already been touched on in terms of some of the decision making and where that should lie—whether it's at community town council level, county council or Welsh Government. But just to help me out a little bit, there are two elements here: there's this policy making and then there's decision making. And in terms of policy making, there's a framework that could be a national framework set up and then decisions are made at a local level, or there could be a policy set at a very local level around second homes, for example. I'm just wondering where you think that balance should lie. Is it a combination of both, very local and then national frameworks, for this type of thing or whether everything should be done at local level? It's a fairly open question, but, yes, policy and decision making—where should those things lie? Thanks.

I think Jeff is indicating. Jeff.

Thank you very much. For me, one of the major issues is the principle of subsidiarity, and certainly, one of the issues that were raised by the councillor from Newport is that the town and community councils feel that they don't have sufficient power over the planning system. When I talk to people from other town and community councils, I get the same impression, and our councillors feel the same—that they don't have the powers. Perhaps it would be easier to count the number of town and community councils that don't feel disempowered in this process. So, we do need more of a say for town and community councils. It's worth noting that, some town and community councils, their members speak to local people, they have their finger on the pulse in the local community, so they know what's what. But when we see—. Decisions are made on higher levels, and sometimes it feels as though they are far away and removed from local people, and that's where this subsidiarity principle comes in. I think that many town and community councils would welcome having more of a say in terms of policy, but also in terms of decisions, as you mentioned, and how we deal with planning applications. So, I think that that is an important point to make and that we need that local say.

Okay. Sam.

Yes, thanks. That's really helpful to hear, and, yes, I think the balance of the two is interesting. Jano's got her hand up, sorry, Chair.

Yes, Jano.

Yes. So, I think, from my point of view—. I'm saying 'my point of view' because there may be people in the community who disagree with me, but I think the main thing is that the Welsh Government has got to take a lead on this and enable the planning authorities—in our case, the national parks—to be able to focus on particular communities in a different way from other communities, to make a differentiation between communities. Pembrokeshire has got many different kinds of communities, with very many different needs and different solutions, but we have this one-size-fits-all solution at the moment that, in order to finance the affordable housing, you finance it with market housing. That is the rule. The proportions are fixed. And this is what is actually devastating our town, visually and culturally as well, because this is bringing in the second home owners, the retired people, and it's vital that the planning authorities work with the town councils. Newport Town Council could work with the national parks to formulate policy for Newport.

And the style of the building—. No-one mentions design. I don't know about the other communities, but the buildings that have been going up in Newport are not in the vernacular of the town. That in itself is an absolute—. It's destroying a beautiful community. It is possible to build modern houses in the old vernacular, and it's not being old fashioned or anything, but you can reproduce streets. It's possible to do that. All of those things in planning, the local community has to have a say in it.

The local community has to have more power and a closer relationship with the planners, because at the moment the power lies with the developers. The developers can push and push and push and push, and they get their way, and the town councils can do nothing, and the community gets angry. And the truth of the matter is that we don't feel safe. We don't feel safe about any piece of land that comes on the market. We don't feel safe when any house comes on the market. We all watch it. We watch the price going up on the land; we watch the price going up on the houses. We don't feel safe. We can't do anything. So, putting power into the local communities and the town councils taking the lead in those communities is absolutely essential to all of this. So, yes, Welsh Government, make that possible and then ensure that the planning authorities and the local authorities are actually having to do that. It's a very important future.

Okay. Rhys.

I'm of the view that we need local policy, because we see the patterns that we have in Wales in terms of second homes in different counties. In some counties, there's only a handful of second homes, but in others there's a very high number of them, and so there is a need in terms of those statistics to have policy on a county level, but also in specific circumstances, perhaps, we need policy within some counties as well. You have a wide range within Gwynedd in terms of the numbers of second homes in particular communities. In Abersoch, over 30 per cent, easily, are second homes. In Caernarfon, it's less than 1 per cent. So, we need that difference in policy within counties according to local circumstances, but, certainly, it has to be finer than on a national level.

Okay, thank you very much, Rhys. Sam.

Thanks, Chair. I'm conscious of time, so just a really quick one here and perhaps maybe one person wants to respond. Just in terms of a—. I think someone mentioned it earlier. There's obviously a tipping point in communities as to when you think that there is a need for some sort of intervention. I'm just wondering how you think that can be defined. Rhys, your point just a second ago—. Wrexham as a county has, I think, five or fewer second homes, whereas Gwynedd has 5,500, and the furthest east of Gwynedd and the furthest west of Wrexham are probably only about 10 miles apart. So, how do you define a tipping point within communities around the number of second homes?

Rhys. Oh, there we are. And perhaps Dyfrig as well. Rhys first, then.

Well, I would say that it is difficult to define, isn't it? But, in terms of the Welsh language and culture, for example, the point or threshold where damage is caused is when there are more second homes than the current percentage. There are very high percentages in many parts of Wales. When there are more second homes than now, even more damage is done to the Welsh language. There are fewer Welsh-speaking people who can live in their communities.

So, how can you define that threshold? That's a very good question, but it's not as simple as setting a percentage for the county as a whole. It is very dependent on individual communities. As I mentioned earlier, you have 1 per cent of homes in Caernarfon being second homes, but if you were to set a threshold of 15 per cent on Caernarfon and the whole county, the danger is then that you have people—. The threshold will have been reached in Dwyfor in terms of second homes and then people will be seeking second homes in Caernarfon and that would then have an impact on the linguistic fabric of that town, which has a very high percentage of Welsh speakers. You have to look at individual communities to decide what the threshold or tipping point is. It's not good enough to see, 'Well, the school's closed; that's a tipping point.' You have to be able to anticipate what the numbers will be. If the numbers aren't going down, then the tipping point has been reached, hasn't it?

In terms of prices, that could be a way of measuring a tipping point in terms of who can live in a county, bearing in mind the average wages in that area. That could be a consideration too. It's a very difficult job of work to decide on the threshold, but, in terms of the Welsh language, it's reached when there are more second homes than now. It has already been reached in some parts, in my view. We are in a crisis in some areas, and that's why the demand in Welsh-speaking communities is that no more second homes should be allowed, because it's having an impact now.

Okay. Diolch yn fawr, Rhys. And Dyfrig.

Yes, very briefly, if we were to have a licensing system, then communities could decide how many second homes or whatever we're talking about—holiday homes—how many of them are acceptable to their communities, so towns such as Dolgellau could decide, 'Well, we don't want more than 10 per cent of homes to be second homes.' And if there were to be more than that now, then that's it, no more will be allowed or licensed, and I think that decision could be made locally.

Thank you, Dyfrig, and Jeff.

Thank you, Chair. There are a number of ways to decide what the tipping point is. In terms of the Welsh language, well, scientifically, when a community falls beneath 70 per cent of people in the community being able to speak Welsh, then that's a tipping point or a threshold itself in linguistic terms. Partly because of the situation in terms of second homes, there aren't many of those communities left, but it is worth noting that when we talk about the Welsh language in particular.

Another kind of threshold that I would like to see is when we compare those who are waiting for a roof above their heads versus the number of second homes in an area. For example, I think, in Pembrokeshire, around 5,000 people are waiting for a home and there are around 5,000 holiday homes. In Aberystwyth, there are 200 holiday homes, according to the data from, I believe, 2020—I'm sure it's gone up by now—and there are 118 people on the waiting list just in terms of category A. And, of course, there are different categories and I'm sure that there will be other people in the lower categories who are waiting for homes. Well, I would venture to say that, if there are hundreds of people waiting for a place to live and there are around 200 holiday homes in the town, it could be argued that there is a threshold or tipping point associated with that too. If you say that over such and such a percentage of people are waiting for a home and there is such and such a percentage of holiday homes, you could say that, just in moral terms, there has been a tipping point reached in that regard too. I'd like to echo what has been said, that it's only possible for us to data to see if we reach a certain threshold if we take action to regulate, if we introduce this new use class of C5 and C6 and if county councils can regulate the second homes market. Otherwise, we won't receive the full data to decide if we've reached any kind of threshold that we've set.

Okay. Thank you very much. We will have to move on now to Joel James.

Thank you, Chair, and thanks, everyone, for coming to today's evidence session. I know it's briefly been touched upon earlier in the talk, in the discussion, but I just want to touch upon taxation. Because one of the evidence sessions we've had was with Dr Simon Brooks, who, if I check my notes now, talked about calling for council tax premiums to be used in their fullest in areas that are being affected and whether or not there needed to be a consultation on if self-catering businesses should be exempt from small business rates relief. He also called for higher rates of land transaction tax to be varied more locally, and I'm conscious that the Welsh Government's also consulted on this. I just wanted to touch—pick your brains, I should say—on those issues. And what I'll do, I've got about three questions that I'll ask all in one go.

I'm keen to know your views on the role of local and national taxation in addressing issues connected to second homes and short-term lets. I'm also quite keen to know what your concerns are, or your thoughts, on that movement between properties from council tax to business rates. And then, also, finally, in terms of having that second home rate, to put it bluntly, what's the point of it, then? Is it there to disincentivise second home ownership, is it to penalise second home ownership, or is it there to raise funds for local projects? I'm conscious that, in previous evidence sessions, they've said that that second homes rate doesn't raise that much in the grand scheme of things in terms of the council taxes. And I want to also talk about then is there a tipping point, where there's that threshold where people are no longer prepared to pay that premium on second homes, and that's when the market will stop, and then how will that impact council tax payments in terms of residents who live in the community and call it their home. So, obviously, then, I'd imagine that shortfall would have to made up somewhere, and I just wanted to know your thoughts on that, then.

Okay. Dyfrig.

Thank you for the question, because this is area that I genuinely take an interest in, truth be told, because I think taxation is one of the vital tools, alongside licensing and planning. Part of the purpose of the premium is to bring in additional income to local councils to make up for the loss in housing stock, and I think councils use that additional income to provide homes in local areas.

It's also—to use your term—a disincentive; I'm sure it is. Having to pay a premium twice the rate of council tax clearly makes owning a second home expensive. The problem that we see, of course, is that, in increasing the premium, the vast majority of second homes convert to business rates, and that's too easy a process and we lose that income; there is a loss to the public purse if they don't pay anything. I don't believe that second homes or holiday accommodation should have any kind of tax relief. But I think that the solution is, as we've proposed, to revise section 66 of the local government Act so that every dwelling, without exception, pays council tax and any premium that a local council decides to levy. So, any dwelling that hasn't received planning permission for another use—every dwelling—should pay council tax. So, that means there is no question with regard to how many days the property is let, and the valuation office doesn't come into it. It's an easy answer, it's subordinate legislation that could be introduced fairly quickly, and I think it would be very effective in bringing additional income to local authorities.

Of course, it's also a significant disincentive, from not paying any taxes at all to paying twice or more, according to the decision of local councils, on an annual basis. And this is where I believe that this is a very important tool; this is an annual tax on houses. Adding to land transaction tax is another tool, but I don't think it would be as effective as getting every dwelling to pay council tax and, therefore, being part of the premium regime, where appropriate. Thank you.

Thank you very much, Dyfrig. Rhys.

Yes. I'd like to emphasise that taxation is the key here. When we, or government, have, over the centuries, tried to create a disincentive to prevent people from doing something, be that smoking or drinking alcohol, they increase the tax on it. And perhaps that's what we need to do with second homes too when they are damaging to communities. That's why we need local taxes that acknowledge the problems within those communities where second homes have reached a high level.

In terms of holiday homes, I agree with the fact that dwellings, if they've been primary residences at one time or another, should have full council tax rates payable on them. Perhaps it could be argued that some buildings will never be suitable as permanent dwellings and, therefore, there is a question about whether they should pay full council tax. But, anything that has been a home or a permanent dwelling, then the council tax liable should be the same. There should be no exemptions from council tax for those.

I would say that land tax is the strongest and most powerful tool for the effective regulation of second homes, particularly given the rate at which they are being bought at the moment, where local people are being deprived of permanent homes. What land tax offers is a kind of disincentive for people from buying a holiday home and seeing it as an investment. If the land tax is going to be put forward specifically for those people who buy homes with a view to using them as holiday accommodation or a second home, then it will make all the difference. The consultation on land tax is very significant at the moment, because they propose creating a higher rate of tax—there is already a higher land tax, but there is an even higher rate being proposed for those who buy a house with a view to using it as holiday accommodation or a second home. And, if they buy with the intention of using a property as a permanent dwelling but then in future use it as a second home or a holiday home, they will be included in the higher rate of tax. I think that's a very good idea, and it will decrease the rate at which second homes and holiday homes are being purchased at present. Because the situation has never been as bad as it is currently, and that higher rate of land tax will control the market so that no more local people are excluded from owning homes. Thank you.

Okay. Thank you, Rhys. Thank you, Joel. We'd better move on. I think, Carolyn, we've dealt with planning and regulation to a very considerable extent, but is there anything further you'd like to ask?

Yes, we have, actually. It's amazing how much has been touched upon already, which is how important it is. So, there is concern about whether or not local planning authorities have the resources to manage the register and licensing of holiday accommodation, and Rhys touched upon, perhaps, Rent Smart Wales having the resources to be able to do that instead, or managing it. So, I just wanted to—. Perhaps you'd want to say something further on that.

Also, the other question was whether town and community councils should have more say in how planning policy is implemented in the communities. So, that's been discussed quite a lot already, and the benefits of having a licensing system for short-term lets and holiday accommodation, which has already been touched upon. So, really, it's just about whether you think that there are enough resources in local authorities to be able to manage lets, if it's going to be an issue.

Dyfrig.

Well, I'm jumping in as a county councillor to answer that question, and the simple answer is that there will be a need for additional resources to implement a new planning regime and a new licensing regime. Certainly, there would be a need for additional resources for all of that.

From the point of view of having a national licensing regime, I would prefer to have a locally based, county-based, if you will, system, where there is better accountability than there is in a national system. But the simple answer is that there will be a need for more resources in one way or another. And if we have the desire to take action in this area, then we will need to have those additional resources to do just that—and I emphasise 'additional' resources because it is a constant complaint from local authorities that more responsibilities are given to county councils but the funding doesn't follow. That's an old, old complaint, and I see you smiling. But, in this case, if there is a commitment to try to seek solutions, then there will need to be additional resources, yes.

Can I just say 'thank you very much' to everybody who's attended? It's been really interesting and informative and useful, so thank you very much.

Okay, thank you, Carolyn. Let's move, then, to Alun Davies. Alun.

Thank you very much, thank you for your time. Yes, Dyfrig, I was smiling when you said that. I note that you've welcomed the current settlement, and that's important to note. Like others, I very much appreciate the time and support that you have given to us this morning. Looking ahead, I see, too, that Newport council—I'm reading the English here; I almost said 'Casnewydd', but it's 'Trefdraeth', Newport in Pembrokeshire—have been holding a survey of the town and have been looking at the issues pertinent to Newport. As to one of the things that we have heard—and Simon Brooks said this in his evidence, too—about the kinds of data and information that we have on this, are all of you confident that we have the kind of background information and data that we need, or can you point us to any gaps where having further the information and data would assist us to move ahead? I think that would be very helpful.

Shall we start with Jano? Jano.

Yes, it is 'Tydraeth' or 'Tydrath'—the name of Newport.

In terms of gaps in knowledge, I think one of the things that affects us very much here is—and it is a pretty well ignored part of this report—the quantity, the sheer number of affluent elderly people moving into the community. While they're wonderful to have here and they're great volunteers and they keep us going, it is one of the main causes of the loss of use of the Welsh language. There are no children going to the school and they can afford the houses. Land transaction tax isn't going to touch them; it's peanuts. So, that is something that we need to quantify, and I don't know what you can do about it, but it is a big—. If I say 'problem', that's overstating it; it is one of the issues that needs to be addressed, and I don't know how the hell we do it, to be honest. I just wanted to say that.

Okay, and Rhys.

In terms of the data, I've been studying data for the land transaction tax, particularly that higher rate of land tax. It's been disaggregated now in terms of annual statistics, and according to county and every Senedd constituency too. What I would like to see and what would be very effective data, and I'm sure the Welsh Revenue Authority has it, is land tax data for individual communities, and wards, in a way. I'm sure that the WRA would be able to disaggregate the data in that way and present it to the Government on that basis. As part of my role, I put forward land tax applications for my clients, which ask for their name, their previous address, the price of the home, whether they're buying their first or second home, whether it is subject to higher rates, and the location of the house that is being bought. So, there's a lot of data provided in making an application with regard to land transaction tax. Therefore, there should be that hyperlocal data relating to land tax, which would enable us to see how many second homes are being bought in individual communities and wards, rather than according to county, because, in some wards, it's a very intensive problem, particularly those in coastal areas, and we need a clearer picture of the situation.

What we also don't have is some kind of presumption of the future sustainability of communities, and it's a shame that our future generations reports by county councils don't go into that detail so that we can analyse how sustainable specific wards are within individual counties and how sustainable they'll be in future. Making that kind of analysis would enable us to see how many children are in the schools and whether numbers have declined, whether the number of people living permanently in villages has declined, how many second homes there are, whether the number of Welsh speakers has declined, and we could do that according to ward. We could then look at purchasing patterns in order to have an idea of future impact. This would be very effective data, as it would enable us to tailor our policies to meet needs in individual communities, because every community has its own issues and problems to face, as we know.

So, I think we should look at the data on land transaction tax, disaggregated according to ward rather than according to county. I think that's possible. Also, we should have future generations reports that are far more specific than they currently are and which are disaggregated clearly according to ward, because the sustainability of a county or region won't let you decide whether an individual community will have a thriving future, and that's what we need. We need to see that glimpse of what's happening on the ground. The data is being collected anyway—we don't need new sets of data. What we want to do is use the data that we currently have in a more specific way. Thank you.

Okay. Great. Thank you all very much. Thank you all for coming in to give evidence to committee this morning. It is very valuable and useful for us. You will be sent a transcript in due course to check for factual accuracy. Diolch yn fawr.

The next item on the committee's agenda today is item 3, papers to note. There are three papers to note. The first is a letter from Gwynedd Council in relation to second homes. So, that will feed into this inquiry. The second is a letter from the Petitions Committee with regard to a petition urging more work on affordable homes, and we will consider that later today when we deal with our forward work programme. And the third is a letter from the Minister for Finance and Local Government on the draft budget, which, again, we'll be considering later in the meeting today when we deal with our budget report. Is committee content to note those papers on that basis? Yes. Thank you very much.

Item 4, then, is a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of this meeting. Is committee content to do that? Okay. Thank you very much. We will, then, move into private session.