What changes to planning legislation and policy has the Welsh Government proposed for second homes and short-term holiday lets?

Last month, the Welsh Government’s consultation on their proposals to amend development management and planning policy in Wales ended. Views were sought on changes relating to second homes and short-term holiday lets, aiming to provide tools for local planning authorities to manage the impact of second homes within their communities.  

Although holiday homes play an important part in boosting the local economy through attracting tourists and increasing the profile of an area, they can also have varying adverse impacts on local communities, i.e., through reducing housing stock available for local people, increasing house prices, and harming the vitality of the Welsh language and stability of local communities. 

So, what is currently in place to tackle the issue? 

Currently, second homes or short-term holiday lets are not specifically referenced within the Town and Country Planning (Use Classes) Order 1987 (UCO). Second homes would generally be captured as part of use class C3 (dwelling houses), however changing the use of a primary home to a secondary home is unlikely to be considered development. 

Planning permission might be required for the change of use of a dwelling house to a short-term holiday let, dependent on whether the local planning authority considers a material change has taken place, which is determined on a case-by-case basis. 

What changes are being proposed? 

  • Amending the UCO to create new use classes for ‘Primary Homes’, ‘Secondary Homes’ and ‘Short-term Holiday Lets’. 

It is proposed to amend Part C of Schedule 1 of the UCO by:

  • – Amending the existing use class C3 (dwelling houses) to apply where a dwelling house is in use as a sole or main residence for more than 183 days in a calendar year (i.e., Primary Homes);
  • – Introducing use class C5 (Secondary Homes);
  • – Introducing use class C6 (Short-term Holiday Lets).

Whether a material change of use occurs will be a matter for each local planning authority to consider on a case-by-case basis.

  • Make related amendments to the Town and Country Planning (General Permitted Development) Order 1995 to allow permitted changes between the new use classes. 

If the UCO changes are taken forward, it is proposed to amend the GPDO to allow unlimited changes of use between a primary home, secondary home or short-term holiday let. 

Where local authorities have appropriate evidence, they would be able to issue an Article 4 Direction to remove the permitted development rights for a defined area, allowing them to address localised issues in targeted locations through requiring planning permission to change between the use classes. 

The change of use from C6 or C5 to C3 will not require planning permission in any case, particularly in areas where there are localised housing pressures.

  • Amendments to Planning Policy Wales (PPW) 

The proposed changes to PPW make it explicit that, where relevant, the prevalence of second homes and short-term holiday lets in a local area must be taken into account when considering the housing requirements and policy approaches in Local Development Plans (LDPs).

Where a local planning authority imposes an Article 4 Direction, a condition could be placed on all new dwellings (class C3) restricting their use to primary residential, where such conditions would meet the relevant tests.

What implications will the changes have on the local community? 

Where an Article 4 Direction or localised policies are in place to control second homes and short-term holiday lets, there could be an impact on the local housing market through creating a divide in the market, consisting of a market with houses that could not be sold as second homes, and another market with houses that could be sold as second homes. This could lead to house prices falling and increasing, respectively. It could also lead to problems for homeowners wishing to sell their properties in future due to the restrictive condition in place. 

Another concern is that the use of Article 4 directions and locally specific policies in LDPs could displace issues of second homes and holiday homes to neighbouring communities. 

What implications will the changes have on the planning sector? 

In the short term, the changes could lead to an influx of applications, lawful development certificates and potential appeals from property owners wishing to confirm the legal use of their properties as a second home or a short-term holiday let. Local planning authorities would also be burdened by additional tasks including evidence gathering, monitoring and enforcement. There is no doubt that these changes will have serious resource implications for local authorities. 

Nonetheless, a key aspect of the planning system is to ensure the needs and concerns of local communities are addressed. The impact of second homes and holiday homes on the affordability of housing for local people, in particular younger people, and the vitality of the Welsh language is evident in certain communities across Wales, for example, Carmarthenshire and Gwynedd. 

We therefore welcome, in principle, measures to address the impact of second homes and holiday homes, provided that there are procedures in place to ensure the housing market in Wales is able to remain fluid and responsive to the supply and demand experienced across the country. 

First of all, however, we urge the Welsh Government to explore measures other than changes to planning legislation and policy, such as licensing requirements and Land Transaction Tax (LTT). This would prevent adding complexity to the planning system and workload to already under-resourced local authorities. 

Further research should also be undertaken to clarify what constitutes a material change of use in the context of primary and secondary homes/short-term lets, and to address scenarios whereby the distinction of the primary home may become unclear (such as where two homeowners in a relationship split their time between each other’s properties), in order to avoid issuing new planning legislation which is effectively unenforceable.