A local authority is reported to have said that a controversial new policy will reduce house values by five per cent.

Gwynedd Council in Wales has this week concluded a consultation on whether to seek Article 4 Direction powers, which would mean local people would have to seek planning consent to turn their property into a holiday let or even just an Airbnb-style short let.

The Welsh Government last year announced a series of measures to reduce the number of second homes and short-lets: amongst them, planning legislation was amended to allow local planning authorities like Gwynedd to use an Article 4 Direction to control the use of houses as second homes and holiday accommodation. Gwynedd is the first council to seek to use this power.

Now the council is being quoted by the BBC as admitting that it is “inevitable” that local prices might decrease as a result of this policy, if it is implemented next year. The reduction may be as much as five per cent. 

In a report aiming to justify the move, and seen by the BBC, the council says: “Inevitably, it is likely that intervention by introducing an Article 4 Direction and, therefore, controlling the use made of residential units, would have a [possibly minimal] effect on the value of the property on the open market.”

It says a property would lower in value as the new rules would restrict what it could be used for, and adds: “It is, therefore, noted that such a restriction could be a means of securing lower cost market houses within the housing market …  it is inevitable that the Article 4 Direction would have a similar effect on house prices”.

Gwynedd’s council has already imposed a 150 per cent council tax premium on second home owners.

A 1,000-strong Facebook group against the plan claims the council is “playing Russian roulette with people’s assets”.

Last month Martin Lewthwaite – an agent in Gwynedd for 50 years – wrote an open letter to residents via the local Daily Post newspaper and websites.

While property owners can seek planning consent to change a main residence to a second home or holiday let, he warns this will be pointless. 

“It seems very unlikely that permission would be granted as they [councillors] are now fervently opposed to second homes in Gwynedd. To some extent, I can understand their reasons behind this. But they don’t seem to realise that these proposals will affect genuine local people that may wish to sell a property for whatever reason. A property is probably the most valuable asset you own. These proposals are going to take away the rights you have to sell to whoever wishes to buy.

“If Gwynedd council implements this drastic policy, it will certainly limit the marketability of your property. It will have a detrimental effect on its value as it will limit the market you can sell to.”

The consultation closed this week and the council’s decision will be announced next year.