Hammering the tourism industry won’t solve the affordable housing crisis in Wales

The Welsh Government has unveiled plans (here) for its statutory registration and licence scheme for visitor accommodation in Wales, last week. Victoria Bond-Rees comments.

Welsh visitor and holiday accommodation has a good reputation for high standards and a warm welcome. Market-forces and existing regulation do a good job in ensuring visitors enjoy a good holiday experience and the industry remains competitive. If there’s a problem to address in Welsh tourism, it’s that it’s still recovering from the lockdown crisis and it needs help, not hindrance, from the Welsh Government.

Wales does have a problem in the availability of affordable homes. It’s an issue most visible in the tourism honey-pot areas. Consequently, the announcement by the Deputy Minister for Arts, Sport and Tourism, Dawn Bowden MS, cites this as the driving-force for the proposals to introduce statutory registration and a licence scheme for holiday accommodation. It’s part of a package of measures to address what the Welsh Government and its cooperation Agreement partners Plaid Cymru put down to the negative impact second homes and short-term holiday-lets can have on the availability and affordability of housing for local people.

Consulted on last year, our response echoed that of other organisations representing the industry – that research obtained from nearly 1,600 tourist accommodation operators revealed that an overwhelming majority were opposed to the proposals to introduce a licence. They fear that the plans will add further financial and administrative burdens in a highly competitive business environment. More research undertaken with around 100 businesses during the consultation period last year told us how little scope exists to absorb additional costs. Most Welsh rural holiday lets command a modest margin of between £5,000 and £10,000 from three-or-fewer units. More than half are farm diversifications.

Holiday accommodation providers also suspect that the planned licence has less to do with improving visitor experience than a cynical structure to regulate the 182-day threshold to qualify for Business Rates on holiday lets introduced last year, and moreover to impose the Welsh Government’s visitor levy, set to be introduced very soon. Together these amount to a triple-whammy for a sector which has barely recovered from the Covid lockdowns, and which is highly vulnerable to the vagaries of the Welsh weather. Add a possible road user levy mooted by the Welsh Government recently, and we can expect budget-conscious holidaymakers to turn their backs on Wales.

Pain for tourism: very little gain for affordable housing

Believe-me, there are things to gain from a low-cost registration scheme - not only to level-up standards between businesses and the informal/online pop-up holiday accommodation market, but also to facilitate support in time of crisis such as the recent Covid 19 restrictions. It’s remarkable that these don’t feature in the Welsh Government’s plan. However, a frustrating aspect of the licence scheme plan’s link with affordable housing is that it hides from view the simple fact that the Welsh Government has systematically failed to meet its target for building affordable homes for many years, and its policies towards residential letting are removing badly needed rural homes where no alternative accommodation exists. We’ve constantly made the point that improvements in the planning consent system could release land and redundant agricultural buildings for new homes – providing boom to rural communities and not bust for managers of holiday lets.

Critically, the plan offers no hint about how many affordable homes will be created as a result. We’ve argued many times in the past, that many rural holiday lets are associated with farms – often sharing facilities with the letting-manager’s home, they are seasonal, possibly even inaccessible at certain times of the year, and legally only exist under planning consent for holiday lets. Even if they’re released into the residential market, their value may not meet the “affordable” criterion.

We’ll continue to fight the corner for rural tourism operators. The sector’s become a vital part of the Welsh rural economy, many farms having had little choice but to diversify. We remember that the Welsh Government itself spent millions on this sector which contributed around £6.3 billion into the pre-Covid economy – our visitors spending about £17 million per day – not on bed and breakfast, but moreover on attractions, events, pubs, restaurants and shops. The intensity of impact over a range of policies on rural communities needs to be comprehensively assessed and placed under formal scrutiny. It looks like the economic sustainability of rural communities is now a low priority for this Welsh Government.