Second home owners in Wales could soon see a major spike in their council tax bills after Labour signed a new deal with Welsh nationalists. 

On Monday, the Labour-led Welsh government announced a co-operation agreement with Plaid Cymru to overcome being one seat short of an overall majority in the Senedd. 

Although both parties insist the deal does not mean a formal coalition, they set out a policy programme covering a range of areas including tough measures on second home ownership in Wales.

Second home ownership is said by the Welsh government to have reached “crisis” levels, with soaring house prices meaning a growing section of society, predominantly younger generations, cannot afford to live in their home communities. 

A document released by Labour and Plaid Cymru, setting out their three-year agreement, said they would “take immediate and radical action to address the proliferation of second homes and unaffordable housing, using the planning, property and taxation systems”. 

It said: “Actions being planned include a cap on the number of second and holiday homes; measures to bring more homes into common ownership; a statutory licensing scheme for holiday lets; greater powers for local authorities to charge council tax premiums and increasing taxes on second homes.”

Similar approach proposed in Northumberland

It offered no further detail of the nature of the taxation proposals, but Plaid Cymru has previously envisaged steep charges for second home owners.

The party’s manifesto said it would allow local authorities to “charge council tax premiums of up to 200 per cent on second homes” and close a loophole allowing second homeowners to dodge the premium by registering their property as a business.

Welsh councils have had the right to charge a council tax premium of up to 100 per cent on second homes since 2017. 

The suggestion of a cap on the number of second homes in Wales could also effectively see English buyers blocked from investing in the housing market if they do not live locally. 

A similar approach has been proposed in Northumberland, where the county council suggested banning sales of homes to buyers who do not live in an area if more than 20 per cent of homes there are identified as having “no usual residents” in the Census. Measures to curb second home ownership have also been introduced in parts of Cornwall and Devon.

The Welsh Conservatives have previously said plans to hit second homeowners with greater council tax burdens were a “veiled attack” on the visitor economy.

Official figures from earlier this year showed 24,873 second homes were registered in Wales for council tax purposes. Gwynedd had the highest number at 5,098, accounting for around 20 per cent of all second homes in the country. 

Swansea Council became the first in Wales to charge the full 100 per cent premium from April 1, and has since been followed by Gwynedd Council.