Thousands of second home owners will not be able to take advantage of what many councillors across Wales were calling an ‘unethical loophole’ which would allow them to access taxpayer-funded grants intended to help small businesses survive the COVID-19 crisis, the Welsh Government has confirmed.

Councillors across Wales have been calling on ministers to close the ‘loophole’ after fears were raised by several local authorities earlier this week that a ‘gap’ in the £1.1bn financial support package for small businesses would allow holiday home owners to apply for £10,000 grants.

Critics included Pembrokeshire county councillor Michael Williams who represents Tenby’s North ward who called on the Welsh Government to act, stating that allowing these owners to ‘exploit’ this relief would be ‘morally reprehensible’.

“Everyone that I have spoken to are extremely unhappy that due to an initial ‘loophole’ that has been exploited by some second home owners, there now appears to be possibly something of a bonanza available for them if they follow this route!” he stated earlier this week.

“I am aware that in recent meetings with Welsh Government Ministers - great concern has been conveyed. To compensate these individual so called businesses would be morally reprehensible.

“We see in the area homes being snapped up for over £850k particularly in Tenby and used for a few weeks a year, offering little financial return to genuine local business and making a handsome return due to this loophole.

“Do they now expect local taxpayers to give them a handout? This must not be allowed to happen when we have local companies and individuals struggling to survive,” he continued.

Gwynedd Council leader Clr. Dyfrig Siencyn had warned that such a loophole could result in millions of pounds ‘lining the pockets’ of second home owners, stating that it would be ‘unethical’ for ‘wealthy individuals’ who own second homes to have access to this financial aid package from the government.

During a session of Wales Questions at Westminster on Wednesday, MP Liz Saville Roberts also pushed the Secretary of State for further clarification, with further lobbying over recent weeks from Pembrokeshire, Ceredigion, Anglesey and Conwy councils.

A Welsh Government spokesperson said: “We have refined some of the eligibility criteria for business support grants to ensure that businesses who are most in need of a grant, are supported.

“Reaching this stage has taken a lot of work and co-operation and we thank local authorities across Wales for their contributions.”

Clr. Williams welcomed the news: “This is really great news. Now the Government should close this legal loophole once and for all, then change planning regulations to make it a requirement that any property that it is suggested should be changed to a second home, should be required to submit a change of use application.

“The Planning authority could then look at the local situation and if in their view it had reached saturation point, refuse the application,” he added.

The government’s new guidance states that three specific clauses need to be adhered to:

• Self-catering accommodation produce two years of trading accounts to 31 March 2019

• Self-catering accommodation must let the property for 140 days or more in the financial year 2019-20

• Self-catering accommodation business must be the primary source of income for the owner (minimum threshold is 50 per cent).

Clr. Siencyn said that he too was pleased that the minister had listened and changed the business guidelines available to support small rural businesses across counties in Wales.

“Whilst we did not agree with the exact wording of the changes to the guidelines, we’re confident that the changes will mean that no second home owner will be able to claim this grant money without presenting evidence that the majority of their income derives from the property,” he said.

“We are pleased that the minister has listened to the arguments that we presented to her and that the public purse will not now be used to enrich those who are already using the Welsh Government’s rules to avoid paying taxes on their second homes.”