First published Saturday, June 01, 2013
For those of you in the Self Catering sector, you will undoubtedly already know what the 70 day rule is about. There may well be a good few of you who have shuddered at the mere mention of it. For those not sure what we are talking about the basic premise is fairly simple – owners of properties that are let for self catering holidays, must ensure that they have 70 days/nights booked out in any one financial year in order to qualify for business rates as opposed to domestic rates.
Now the theory behind this rule was to essentially close a loophole where second home owners were stating that the property was being run for business purposes (ie holiday let) and therefore qualifying for business rates, when in fact they were tending to let it or even loan it to friends and family for breaks, or indeed leaving it to stand empty for much of the year.
However, the current economic climate, coupled with an extremely competitive market place has meant that in addition to those slightly less ‘operational businesses’, many genuine self catering accommodation providers have been hit by an increase in rates having failed to fill the bookings diary for 70 nights or more.
It is a major concern for many. Margins are already tight, with very little room to move in terms of offering discounts or other special offers to attract the paying visitor. Where many of these businesses are currently enjoying the ‘breathing space’ offered by the Small Business Rate Relief scheme, failure to fill 70 nights has meant that they have seen their business ‘revalued’ and moved into the domestic rates bandings, instantly adding several hundred pounds if not more, to the profit and loss accounts.
In a statement issued today by Welsh Government, we are told that “The Minister for Local Government and Minister for Economy have commissioned independent research to examine the operation of these regulations, which were originally introduced to close a loophole allowing some home-owners to pay lower council tax by listing their property as a holiday let whilst not actively seeking to let it.”
At time of writing we don’t yet know when this research will begin, or when it will be published. Pembrokeshire Tourism has already raised the issue with the Wales Tourism Alliance, and been featured as part of a BBC Wales report on the issue. What we will continue to do is raise the issue, and with this in mind we would welcome your feedback and comments. Have you been affected by this rule? Is it causing you to reconsider your business operation? The more information we have from you as operators, the stronger the message we can take to the Welsh Government on this issue. Please get in touch with us, either by phone on 01646 622228 or email your thoughts to email@example.com