The Surge of Second Homes for Sale in Pembrokeshire: A Response to Council Tax Premiums

In recent months, Pembrokeshire, a picturesque region in Wales known for its stunning coastlines and charming towns, has witnessed a dramatic increase in the number of second homes being put up for sale. This surge, exceeding 250%, has sparked a heated debate among homeowners, local businesses, and government officials regarding the implications of the Welsh government’s council tax premium policy.

The Council Tax Premium: A Double-Edged Sword

The Welsh government has implemented a council tax premium aimed at addressing the growing concern over second homes and their impact on local housing markets. Many councils across Wales now impose inflated tax rates on second homes, with some charging up to 300%. The intention behind this policy is twofold: to free up housing stock for local residents and to generate additional income for councils.

In Pembrokeshire, the council tax premium was raised to 200% in April, effectively tripling the tax burden for second homeowners. This drastic increase has prompted many owners to reconsider their investments, leading to a flood of properties being listed for sale. In July alone, 135 second homes were put on the market, a staggering rise from just 38 listings during the same period the previous year.

The Market Response: Listings vs. Sales

Despite the significant uptick in listings, actual sales of second homes in Pembrokeshire have plummeted to record lows. According to estate agent Hamptons, second home sales accounted for only 4.5% of total property sales in the first half of 2024, a stark contrast to 21% a decade ago. Local agents have expressed concerns that the properties being listed are often priced beyond the reach of first-time buyers, creating a mismatch in the market.

Rhys Jordan, an agent from Nested Estate Agent Pembrokeshire, highlighted the disconnect: "Quite frankly, here in Pembrokeshire, wages are low. Anything in reach for first-time buyers needs to be below £250,000. All they’ve done is create a glut of unsuitable properties for long-term use on the market." He further noted that many homeowners are exploiting a loophole that allows them to list their properties for sale to avoid the increased council tax premium, as second homes are exempt from council tax for up to one year.

Economic Implications: A Local Perspective

The influx of second homes has historically contributed to the local economy, providing a steady stream of income for businesses year-round. Matthew Ronowitz, who operates three restaurants in Tenby, expressed his concerns about the potential fallout from the council’s policy. "The influx of second homeowners has helped us get more of a 12-month year for business trade," he stated. "If these second homeowners feel like they’re being pushed out by the local authority, it could impact the business and the jobs we are able to provide for local people."

Similarly, John Mather, who runs a gift shop in Tenby, emphasized the importance of second homeowners as consistent customers. "They kit out their homes, they’ve got a disposable income, and they support the businesses in town," he explained. The potential decline in second homeowners could lead to a decrease in business activity, affecting employment and local services.

The Voices of Second Homeowners

For many second homeowners, the rising council tax has become a point of contention. Ifor William Hywel, who has owned a second home in Tenby for 30 years, shared his frustrations: "My council tax for the property has risen from around £2,000 to £7,000 a year. I understand the theory behind it, but frankly, I don’t think it works. It’s just another tax." He echoed the sentiments of many in the community, arguing that the policy does little to address the underlying issues of housing affordability for first-time buyers.

The Council’s Stance: Seeking Balance

Local authorities, including Pembrokeshire County Council, are navigating a complex landscape as they attempt to balance the needs of residents, businesses, and second homeowners. Cllr Joshua Beynon, the cabinet member for corporate finance and efficiencies, stated, "We’re not trying to ruin the tourist industry locally; we’re trying to find the balance." He emphasized the importance of having residents who contribute to the local economy year-round, rather than relying solely on seasonal visitors.

A spokesperson for the Welsh government affirmed their commitment to monitoring the effects of the council tax premium, stating, "We will continue to monitor the effects of this legislation to ensure it is achieving its intended goals."

Conclusion: A Community in Transition

The sharp increase in second homes for sale in Pembrokeshire reflects a broader struggle between local governments, residents, and property owners. While the council tax premium aims to address housing shortages and generate revenue, its unintended consequences have sparked a complex dialogue about the future of the region’s housing market and economy. As Pembrokeshire navigates this transition, the community’s resilience and adaptability will be crucial in finding a sustainable path forward that benefits all stakeholders involved.