by Dafydd Meirion
Plaid Cymru, the Welsh national party, says that holiday homes could become more of a problem after the British government announced a decision to offer tax relief on second homes. This could exacerbate the housing crisis in the Welsh language heartlands. The latest figures show that there are over 15,000 second homes in Wales - most being in the ownership of people from England. The highest numbers being in the rural counties of Gwynedd, Pembrokeshire and Powys where the Welsh language is strongest.
But this is not a problem that is confined to Wales. Cornwall has a substantial number of holidays homes, with some areas having up to 90% of their properties being second homes. And a number of English local authorities, mainly in Cumbria and in the Pennines in northern England, have taken measures to make it more difficult to buy second homes in their areas.
A recent announcement was made by the British Treasury Department to expand self-investing pension plans to include second homes. This would be effective from April 2005 onwards and would cut the cost of buying a second home because wealthy outsiders would benefit from a 40 per cent tax perk.
'I am astonished at the stupidity,' says Plaid Cymru Member of Parliament for Caernarfon in north-west Wales, Hywel Williams. 'These favourable tax and pension arrangements have been introduced with no regard to the effect it will have. House prices in Wales will increase even further with the consequence of pricing even more of our young people out of the local property market. The British Chancellor has again opted for the easy option of pandering to the prosperous areas of England.'
Mr Williams added that north-west Wales had one of the 'highest concentration of holiday homes in Britain', and that the average price of a Welsh property was already expected to rise by 16 per cent next year compared to just 8 per cent in London.
The worry is that investors in these pension schemes will be continually selling and buying properties to put the tax free profits into their schemes. This will raise even further the prices of properties in areas where there are a substantial number of second homes, and will make it virtually impossible for young Welsh-speakers to obtain a home of their own and more will therefore have to migrate to English-speaking areas.
But a British Treasury spokesman said that 'any capital gains or rent income from buying a second home would have to stay within the pension plan' which they say would not make it an attractive investment. But as the price of houses in so called ‘attractive’ areas rise up to 20 per cent in a single year, investors will see the property market as an attractive one to invest in.
The two Welsh-language pressure group, Cymuned (Community) and Cymdeithas yr Iaith Gymraeg (The Welsh Language Society), want the National Assembly of Wales to intervene. They have already held protest rallies throughout Wales - the latest being in the capital Cardiff. Both groups want the Welsh government to offer more money to the Homebuy Scheme where locals receive grants to help them compete in the housing market and they also want potential owners of holiday homes to have to apply to local authorities for planning permission to change the use of a property from permanent use to a holiday use. This would allow local authorities to control the amount of second homes in their areas.
But Plaid Cymru see this latest move by the British government as another badly thought-out scheme that will be of benefit to the wealthier sectors of British society but harming those living in the Celtic countries.
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