The Impact of Increased Council Tax on Second Homes in Wales: A Boon for First-Time Buyers?

In recent years, the Welsh government has taken decisive steps to address housing affordability and availability by increasing council tax on second homes by up to 300%. This policy shift aims to curtail property inflation driven by second-home ownership, especially in picturesque and tourist-heavy areas, and to make homes more accessible to local residents. But how has this impacted the property market, and is it genuinely beneficial for first-time buyers? In this blog we examine the issues and see if the policy is already proving effective.

1. Background on the Council Tax Increase

The Welsh government introduced higher council tax rates for second homes as part of broader housing reform from 1st April 2023. By doing so, they aim to deter property owners from holding multiple houses, thereby freeing up housing stock for permanent residents. Areas with high levels of second-home ownership, such as coastal regions and rural communities, have been particularly affected.

2. Effects on the Property Market

The increase in council tax has led to a noticeable impact on the Welsh property market. Many investors and second-home owners are reconsidering their portfolios, resulting in a wave of properties returning to the market. This shift has led to a stabilisation of property prices in areas previously inflated by the demand for second homes, making these markets more accessible to locals. In real terms, prices are falling.

3. Opportunities for First-Time Buyers

For first-time buyers, the policy change presents an opportunity. With more properties available and at potentially more reasonable prices, young families and individuals are finding it easier to purchase their first home. The newfound availability in housing helps address the issue of locals being priced out of their communities.

4. Community and Economic Rejuvenation

By curbing the trend of second-home ownership, this policy supports the Welsh government’s goal to rejuvenate communities. More permanent residents mean increased demand for local services, businesses, and schools, fostering stronger, more vibrant communities.

5. Potential Challenges and Considerations

While the policy provides clear advantages, it is not without challenges. There is a risk that property owners may pass on increased costs to long-term tenants, or that the policy could deter future investment in certain areas. Additionally, local economies that rely heavily on tourism might experience short-term dips due to fewer vacation homes.

Conclusion: A Positive Shift for Beginners

Overall, the increase in council tax on second homes in Wales appears to have created a more favourable environment for first-time buyers. By opening up the housing market, the policy helps local residents secure homes within their communities, promoting economic stability and growth. As the situation evolves, continued monitoring and adjustment will be crucial to balance the needs of all stakeholders involved in the Welsh property market. 

For first-time buyers, this development signifies a potential turning point—ushering in a new era of opportunities within the Welsh housing landscape. We would not be surprised to see similar legislation implemented in England within the foreseeable future.

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This blog was prepared by Alexander JLO’s property partner Matt Johnson on the 4th March 2025 and is correct at the date of publication. Matt has many years of experience of dealing with property work and specialises in new build and shared ownership properties throughout England and Wales.  His profile on the independent Review Solicitor website and be found Here