Please note any comment(s) you may have in relation to the Article 4 Direction below.

The stated aim of the scheme is to control the high numbers of holiday accommodation and second homes ("holiday homes") because “they can be a real threat to the social, cultural and economic prosperity of communities across Gwynedd”.

We care about community and are B Corp Certified. We care about the resolution of the shortfall in housing supply. We wholeheartedly agree with the following sentiments from paragraph 3.11 of Gwynedd’s Article 4 : “Emphasis is placed on the need to ensure a sustainable tourism sector that does not adversely affect communities or replace them, i.e. communities should not be displaced for the benefit of tourism.”

Please take our comments in light of the above. We do welcome the opportunity to comment on the proposed Article 4 Direction.

Specific and targeted location, robust evidence, exceptional circumstances

Paragraph 1.12 “it is considered expedient to refer to the guidance as contained within Appendix D of circular 29/95 which refers to withdrawal of Permitted Development Rights only being made in exceptional circumstances”.

The Welsh Government response to its consultation on Article 4 directions states at paragraph 3.2 “The new procedures support LPAs in controlling the exercise of the permitted development rights in specific, targeted locations within their administrative area where evidence suggests harm is being caused to local amenity, community wellbeing or the proper planning of the area,”

Paragraph 3.3: “Article 4 Direction are necessary to ensure LPAs are able to intervene where, on the basis of robust local evidence, the balance between providing greater freedoms and planning impacts could become distorted.”

So the Article 4 Direction should be in specific and targeted locations, on the basis of robust evidence and in exceptional circumstances.

Robust evidence

The Justification Paper states, at paragraph 2.22, the data isn’t accurate because the sector is not regulated. We agree that until accurate data from a regulation or licensing scheme is available we don’t think it’s possible to fairly apply an Article 4 Direction on the sector which paragraph 6.16 admits is a blunt tool.

Data that is available suggests that house price to earnings ratio in Gwynedd hasn’t increased over the last 18 years. (It was 6.7:1 in 2005. Apart from dipping to 6.2:1 in a couple of years since then it’s never since been as low as the 6.4:1 in the most recent stats from the ONS from 2022 - figure 3.)

We’re confused where the figure of 5.9:1 figure for 2019 mentioned in paragraph 4.4 of the Justification Paper comes from because the ONS figure for 2019 for Gwynedd is 6.6:1, i.e. higher than in 2022.

Paragraph 4.5. then refers to specific areas where the house price to earnings ratio is far worse than the county average. If that is the case, that would be a reason to focus the article 4 direction on those specific areas of the county rather than the full county.

The decision also appears to be made on statistics which tell only half the story such as the one in paragraph 3.9 of the Justification Paper: “The report found that there are 21,718 holiday units listed in Wales on the Airbnb website, with 14,343 of them appearing to be units that would be suitable to live in permanently. It is noted that this corresponds to 31% of Gwynedd's private housing stock.” Many of those 14,343 units that would be suitable to live in permanently are lived in permanently i.e. they are listings for a room in someone’s main home.

Paragraph 3.7 quotes research by the Local Government and Housing Committee "We are very concerned by the the anecdotal evidence that landlords are increasingly moving their properties from this sector to the short term lets market. We are aware that there are long waiting lists for people needing social housing, and a shortage of private rented sector accommodation in some areas is exacerbating the problem."

We’re concerned that policies are being based on anecdotal evidence. These are policies which jeopardise meeting the increasing demand of visitors to Wales to stay in self-catering accommodation, as opposed to other forms of accommodation and so in effect try to force the wrong property back into the residential housing market. This jeopardises local jobs.

Without limiting holiday let numbers, there are plenty of solutions for creating more homes out of unused and under-used land and buildings that would reduce long waiting lists for social housing, and which would also ensure that less than the stated maximum desired 15% of the existing housing stock is in holiday use; see suggestions later in this response.

Get that robust evidence and assess impact of recent policy changes first

Paragraph 2.15, notes that the number of holiday homes has been on the rise in general but in most areas they’re very slight increases of up to 4% over 4 years. Those 4 years were between 2018 and 2022 when for various reasons there was a clear staycation boom. Given changing economic circumstances and the other policies introduced in the sector, there is a significant chance those increases in holiday homes won’t continue and may reverse. The requirement to be let out for 182 days a year to qualify for business rates is not attainable for many legitimate holiday let businesses and so they are now needing to pay council tax premiums, surely intended for second homes rather than their small businesses. This was introduced only months ago and the impact is likely to be significant, yet cannot be measured until a registration or licensing scheme is in. Such a scheme will provide the rich data on the sector that is missing.

Paragraph 5.25 recognises this: “Having a complete data source would enable better control and clarity in relation to the number and concentration of holiday accommodation in specific areas”.

Yet, the view is that the cumbersome planning system should be used as well as the tax mechanisms, without this data. As paragraph 5.23 states: “The financial taxation implications is one vehicle that can be used in order to gain control of the provision, together with being a means of accumulating funds in order to finance schemes that seek to mitigate the impact of and provide affordable housing within vulnerable communities. It is noted, however, and this point of view is recognised by the Government, that the taxation element is only one vehicle needing to be implemented, in conjunction with a range of other mechanisms in order to ensure their efficiency.”

Having a suite of such policies without the complete data source Gwynedd mentions will make it even harder to ascertain the impact on the sector and local economies and ultimately, harder to row back those policy changes, especially a cumbersome planning one. This is recognised in paragraph 6.16 of the Justification Document:

“an area may have provision that is beyond the 15% threshold when the Article 4 Direction is implemented, however, with time the figure could fall, meaning that the community would be below the threshold. With the changes to the qualifying requirements to pay non-domestic business rates the rise in the premium for second homes, it is possible that there will be a reduction in the number of residential units used for holiday purposes. Due to the procedure and process associated with the introduction of the Article 4 Direction, it is not possible to be responsive to these changes and, therefore, it could mean that the intervention is in effect in areas of Gwynedd where the density is not as high as other areas that are possibly on the rise.”

Yet somehow this point is used to justify introducing an Article 4 direction for the whole county rather than as a reason to wait until the registration/licensing scheme is in so it can measure the impact of the tax changes.

Importance of sector

We recognise that Gwynedd appreciates the importance of tourism to its economy but it’s important to be clear about the significance of holiday lets in particular.

Between April and December 2021, the Welsh Government’s statistics state that GB residents took nearly 10 million overnight trips in Wales with 36.52 million nights and nearly £2bn spent during these trips.

There is an increased desire of many of those holiday makers to stay in holiday lets and that is the bedrock of many local visitor economies which are benefitting from the staycation boom. The report we commissioned from Oxford Economics, shows that in 2021, short term let linked activity contributed £3bn to the Welsh economy, supporting 65,000 jobs, many in rural communities. The report also showed STLs have a negligible impact on house prices accounting for a 0.7% increase between 2015-9.

We need to protect the ability of local economies to capitalise on the staycation boom by meeting that demand, that desire, of UK residents to holiday here and increasingly to do so in short term lets as opposed to other types of accommodation. There was a boom after a Covid bust, with property owners and customers alike still recovering, still facing into a cost of living crisis with soaring energy bills and increasing debt, and now regulatory uncertainty and costs, and the international markets competing (and being able to compete) even more for UK travel business, plus there’s price sensitivity. Airbnb’s share price fall over the last few years suggests this market will cap itself.

Any increase in holiday let numbers is because there is demand for it: people want to stay in that kind of accommodation (families like somewhere to cook and outdoor space, digital nomads want a desk) rather than traditional forms of accommodation. Curbing the sector jeopardises meeting that demand or increases prices of existing accommodation in Gwynedd and so people will go elsewhere.

Unintended consequences

Paragraph 6.12 states: “consideration must also be given to the fact that it is not possible to measure and predict the effect that the introduction of the Direction for Dwyfor alone would have on the surrounding and wider area, possibly causing further dispersion of the problem and the associated side effects.”

Paragraph 6.15 states: “It is considered possible to predict that there would be more demand for holiday homes in those areas not facing the intervention. In turn, that would impact on the housing market, pushing house prices out of reach of the local population.”

All of these reasons given for not implementing in just a part of Gwynedd show the possible impact of the proposed Article 4 direction on neighbouring counties.

Alternative solutions to housing supply issues

Given the above, we do not believe that planning approaches to limit the holiday let sector is the best approach.

There is chronic underuse of some types of land and existing buildings and we want to see the right types as the subject of limitation both at policy level and local level; that is those types which contribute less (or nothing) either economically or otherwise to local communities.

They are:

1. Land that is landbanked and missed housebuilding targets generally (missed by 37% according to Community Housing Cymru). We note the Competition and Markets Authority investigation into the widely reported failures in the housebuilding sector across Scotland, Wales and England. We support disincentivising landbanking and the failure to develop land for which planning permission has already been granted.

2. Empty second homes. 43,000 empty properties in Wales in 2021 according to Action on Empty Homes 2021 report. The proposed Article 4 direction affects second homes and short term let (“STLs”) equally but they are very different. On average STLs contribute 6 times more to local economies than unlet second homes (Source: Finest Retreats). So we don’t believe policies should treat them the same. We would support tax rises on unlet second homes.

3. Accommodation that is highly underused could be incentivised to be converted to affordable housing. This might be offices, retail, other types of accommodation where the owner is looking to sell because becoming less popular.

4. Ringfencing new homes that are built for locals or those with local care network and being affordable (through tax incentives/disincentives or otherwise). We appreciate that this one alone won’t resolve housing supply issues, a point touched upon in the Justification Paper, but it should be used in conjunction with the first three measures.

Providing more detail on the first two:

Landbanking/housebuilding

If the building of homes locally can be incentivised, through the tax system, or otherwise, those homes could be locally ringfenced for locals and those with a local care network. Additionally, CPRE calculations in their 2020 report, show that for every 10 new affordable homes built, the economy will be boosted by £1.4 million. Every 10 new houses would also support 26 jobs and generate £250,000 in government revenue. Although the CPRE is an English organisation, these calculations are representative of the general economic impact of housebuilding.

Page 81 of Gwynedd and Anglesey’s Monitoring Report shows that underbuilding is happening locally too by this comparison of the number of units built in the Plan area against the target:

“It is noted that no planning permission exists (April 2022) for a significant number of sites allocated for housing i.e. 31 of the 69 allocations, namely 44.9%. There has been no demand for some of the housing allocations identified within the Plan this may be for a number of reasons including that the economic growth has not been at the expected rate, large scale infrastructure projects have not progressed as expected, as a result of the pandemic or that demand for housing in some of the areas in the Plan has not be at the expected rate.”

Empty second homes

The need to distinguish between empty second homes and holiday lets is summed up neatly by a planning officer, admittedly in England, in the North York Moors, but where similar issues are being considered: “There is always a balance to be struck between diversifying the tourism market and attracting more visitors to the national park and protecting the future of its communities by making sure there is suitable permanent homes available. We consider that it is preferable to introduce planning controls over second homes rather than over short-term lets, as the latter have the benefits of serving the visitor economy, providing incomes for local people and attracting a wider range of people into the national park.” (North York Moors National Park set to Support Government's Short Term Let Changes - This is the Coast )

We support the increased taxing of empty second homes (rather than holiday lets) and ringfencing that income for new affordable homes in the council’s area. This would provide a much more sustainable and flexible solution (gradual increase/tapered/reviewed year by year/ended if need be) without the potential market distortions or unintended consequences of an Article 4 Direction, which as the Council has acknowledged, is much more of a structural change to the system and complicated to reverse.