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The maximum amount of council tax that can be charged on second homes is set to quadruple from next year, the Welsh Government has announced.

The Welsh Government says the 300% rise in the maximum rate is being introduced to ensure people can find affordable homes in the area they have grown up in.

The policy, which comes into force from April 2023, was included in the Co-operation Agreement between the Welsh Government and Plaid Cymru.

Council tax rates are set by local authorities, but this new policy will give councils greater scope to increase council tax on second homes. Currently, second home council tax premiums are capped at 100%.

In Caerphilly County Borough, there are 234 second homes.

The policy also allows targets empty homes, with councils given the power to apply different premiums to second homes as well as long-term empty homes.

Earlier this year, Caerphilly County Borough Council pledged to tackle the “complex” issue of second homes and empty homes.

The Welsh Government’s Finance and Local Government Minister, Rebecca Evans MS, said the changes will give councils “more flexibility” and provide “more support to local communities in addressing the negative impacts that second homes and long-term empty properties can have”.

Ms Evans said the Welsh Government is seeking to “create a fairer system”.

The policy was also welcomed by Plaid Cymru Senedd Member Sian Gwenllian, who oversees the Co-operation Agreement. She said: “It is clear that we as a country are facing a housing crisis. So many people cannot afford to live in their local areas, and the situation has worsened during the pandemic.

“These changes will make a difference, enabling councils to respond to their local circumstances, and start to close the loophole in the current law. It’s a first, but important, step on a journey towards a new housing system that ensures that people have the right to live in their community.”

She said the announcement is “just one part” of a “wider package” to tackle “injustices in the housing market”.

But the Conservatives’ Shadow Minister for Housing, Janet Finch-Saunders MS, criticised the policy and blamed Welsh Labour for the housing crisis.

She said: “This Labour Government is failing to tackle the root issues of the housing crisis; failing to address the fact that, until recently, there have been more empty homes in Wales than there are second homes.

“Labour ministers in Cardiff Bay need to get a grip, address the housing shortage in Wales and provide an environment where hard work can be rewarded.”