A family faces financial ruin after discovering that vacation homes in Wales are classified as ‘second homes’.
Richard and Ruth Davies are struggling to keep their luxury cottage rentals business going after they contracted coronavirus.
They owe £ 8,037 prices despite the pandemic forced them to cancel the booking.
In addition, they only started their new company last September. North Wales Live Reports.
Originally, the council only issued building permits for the Llangollen company on the condition that the four cottages were not used for residential purposes.
The agency has now designated them as “premium second homes” and even suggested that the Davies family may rent them out to homeless families for this purpose.
“That was never our intention,” said Ruth of Llyn Farm near Trefor.
“We feel like we are banging our heads against a wall and now we risk losing everything we built.”
In the run-up to Brexit, Mr and Mrs Davies gave up dairy farming to focus on their new tourism business, Vale of Llangollen Farm Cottages.
The idea was to make sure the farm would stay viable so it could be passed on to the next generation.
The living room, the former stables and an old flour mill have been converted into state-of-the-art visitor accommodation. In August 2019, the couple registered on the online booking site Cottages.com.
Until the coronavirus intervened, it was planned to open to visitors on VE Day last May.
Instead, the Davies family was forced to cancel advance bookings and postpone work to have the cottages ready by September.
“The cottages can accommodate up to 32 people and on Friday, September 4th, we had 30 guests booked,” said Ruth, who quit teaching at Wrexham Glyndwr University to start the company.
“But because of the lockdown, there was still last minute work to be done – the bathrooms were still missing panels and the doors had no handles.”
“This Friday was like Fawlty Towers being crossed with Ground Force as everyone rushed to get the job done.
“Our guests sat on chairs and waited for their huts to be ready. But they were very good at it and everyone said they loved the property. “
The triumphant start stuttered quickly. Within 14 days, the UK government introduced its rule of six, which limited the number of guests in two of the four cottages.
This was followed by the lockdown of the fire in Wales in October and the lockdown of England in November.
Worst of all was the pre-Christmas lockdown in Wales, which saw £ 10,000 advance bookings go up in smoke.
In the meantime, the family received their first bill after an evaluation by the Valuation Office Agency (VOA).
To their horror, they found that the cottages had been charged council tax rather than business tax, which meant they could not apply for corporate resilience loans from the Welsh government.
All start-up vacation rental companies are put on a trial period during which they are first charged the council tax until they have proven that their accommodation can be rented for 20 weeks (140 days) or more in a calendar year.
Mr and Mrs Davies met this requirement – but no other that is unique to Wales.
Unlike in England and Scotland, owners in Wales also have to prove that their vacation home has actually been let for at least 70 days in a calendar year.
For a new company hit by consecutive bans, Ruth said that additional condition was impossible to meet.
“We were instructed to contact the VOA, which we did, although this process can take up to six months,” she said.
“We should also write to local politicians. We’ve sent multiple emails to Ken Skates, our local MS, but every time we’ve just received automated responses, we should apply for credit – which we can’t because we’re not business valued. “
Things were to get worse when Denbighshire Council marked the four cottages as holiday homes – though their planning permits specifically forbid them to be used for that purpose.
This resulted in a 50% levy on the council’s tax bill – a standard penalty used by many councils in Wales to stop excessive second homes.
To help, the authorities suggested that the couple remove all furniture from the cottages so they could apply for a tax break for the local council.
Another suggestion was to rent out the cottages as residential property, although doing so could result in planning permission violations.
As the Davies family struggled with the bureaucracy, their lives came under increasing pressure. Ruth’s 92-year-old father was not only extremely ill, her brother suffered a broken leg and ribs in a farm accident that could have ended much worse.
And in January her brother’s farm near the Wrexham industrial area was flooded by Storm Christoph floods.
“My sister and sister-in-law were up to their waists in the water trying to save their cattle,” said Ruth.
“Your farmhouse was not flooded, but my father’s old house was nearby – there were dramatic pictures in the Daily Post of the current resident being rescued.
“My father said it was the worst flooding since 1946.”
Intervened on behalf of the couple was Clwyd South MP Simon Baynes and Hugh Hesketh Evans, chairman of Denbighshire Council.
At the latest in NFU Cymru, whose political department is planning to lobby the Welsh government for a rethinking of the tax regime for self-catering holiday rentals.
“Quite a few farmers will have diversified into tourism and inadvertently found themselves in a similar position,” said Merfyn Roberts, senior group secretary for the union’s Corwen office.
“If you have to prove that you’ve rented your holiday homes for 70 days, it will clearly be a problem for some Welsh tourism companies during the pandemic.”
The Davies family are hoping to get a positive result with their VOA appeal – but until then, their cottages will continue to be classified as second homes by Denbighshire Council.
The agency said her hands were tied. “The rules that the council must operate under are that additional properties are classified as secondary homes for council tax purposes until they meet the criteria that allow them to be classified for business needs,” a spokesman said.
“The Valuation Office Agency will determine if a property is on the council’s list of tax and business tariffs.”
A VOA spokesman said he couldn’t comment on individual cases.
The council said it understood the “unfortunate circumstances” the Davies family found themselves in.
“We spoke to the Davies about this issue and gave them advice and guidance on the regulations governing additional properties and vacation rentals,” he added.
“We also provided information about discounts and exceptions that are available to you based on your current situation.
NFU Cymru has asked the agency to put Davies’ account on hold until a solution can be found.
Mr Roberts said this had now been agreed until the family appealed to the VOA