Tackling the blight of second homes

Posted: September 1, 2021 | Author: julesbirch | Filed under: Cornwall, Planning, Second homes, Tax, Wales |Leave a comment

Originally published as a column for Inside Housing

As the staycation summer starts to draw to a close, spare a thought for everyone living in the places where the rest of us have been on holiday.

Coastal areas and beauty spots in the countryside are well used to tourists but this year has really brought home the impact of second homes, holiday lets and relocating buyers on housing for locals.

On the beach on the  Llyn peninsula in North Wales, the message is Hawl i Fyw Adra (the Right to Live at Home) while demonstrators have scaled the country’s highest mountains to protest that Nid yw Cymru ar Werth (Wales is not for Sale).

In the South West of England, there are persistent reports of Londoners snapping up homes they’ve seen online without even viewing them in person and of tenants being evicted to make way for lucrative holiday lets.

House prices beyond the reach of local wages and rents inflated by holiday lets have long been features of the market but a new development this year is an acute shortage of any homes for rent, let alone affordable ones.

A quick search on Rightmove for my home town in Cornwall reveals just four rentals listed all summer – a studio flat, two bedsits in an HMO and a retirement flat.

Truro, the administrative centre of the county, is hardly a hotbed of social unrest but on Saturday it saw a demonstration by renters facing rent rises and eviction as landlord chase higher rents for short-term holiday lets.   

In Devon, the Conservative MP for Totnes has declared a ‘housing emergency’. Anthony Magnall said there were only 19 long-term rentals available in the whole local area compared to over 900 advertised on Airbnb. 

Tory MPs across Devon and Cornwall are calling for urgent action to ease the housing crisis in holiday hotspots while in Cumbria Lib Dem MP Tim Farron is calling for changes in planning legislation to prevent family homes being turned into holiday lets to stop what he calls the ‘Lakeland clearances’.

In Wales the issue is probably even more acute and much more politically sensitive because of the impact of second homes on the Welsh language and culture.

In July, the Welsh Government announced a strategy  to tackle the problem based on support for more affordable homes, regulation through the planning system and a statutory registration scheme for holiday accommodation and using the tax system to ensure second home owners make a fair contribution to the communities where they buy.

The measures follow an independent review of policy on second homes that recommended action on a broad front while recognising that policy needs to recognise the differences between regions and localities.

It also spells out a warning about the impact of Brexit and Covid-19 on local housing markets as more people look to make a permanent move and those who would once have bought second homes in continental Europe look closer to home.

However, problems with existing policy suggest there is no instant solution to the problem.

Take tax, for example. Buyers of council tax already have to pay higher rates of stamp duty (Land Transaction Tax in Wales) but the evidence so far does not suggest a huge impact and the Treasury helpfully included landlords and second home buyers in the English stamp duty holiday.

Councils already have the power to charge a council tax premium on second homes and spend the proceeds on addressing  local housing need but not all of them do so and many complain about a loophole that allows second home owners to reclassify them as holiday lets that are not liable for council tax but get small-business relief from business rates.

Or take planning. St Ives in Cornwall has pioneered an approach that uses the neighbourhood plan to insist that all new homes built are for principal residence only. Mevagissey and Fowey in Cornwall and Lynton and Lynmouth and now Salcombe in Devon have followed suit.

However, the impact on local housing markets remains to be seen and critics argue that the effect could just be to divert demand for second homes into the existing housing market and further inflate prices.

Another obvious answer that is not quite so simple is to build more affordable homes – but that means recognising the higher costs involved in areas where prices have been driven up by holiday lets and finding people to build them in rural areas. 

There are 24,000 second homes in Wales that are estimated to be chargeable for council tax but that does not include holiday homes identified by councils.

The Welsh Government has committed to piloting a range of measures in a trial area and will publish a Welsh language community housing plan in the Autumn.

The last English Housing Survey estimated that 772,000 households had a second home in 2018/19. Of those, 495,000 were in the UK, an increase of 77 per cent in the last ten years.

However, that is just part of a larger trend towards multiple property ownership: in 2019 the Resolution Foundation estimated 5.5 million adults in Britain – 11.2 per cent of the population – own more than one property once buy to let is included as well.

That in turn suggests that the second homes issue is only part of a bigger structural problem in a housing market in which wealth begets wealth and those not already on the ladder end up paying the price.

---