In some areas of the UK, second-home owners are certainly coming under increasing scrutiny and financial pressure.
In sweeping reforms announced in early July, the Welsh government gave councils powers to “set a ceiling” on second-home numbers as part of a new scheme that will introduce three new classes of property: primary homes, second homes, and short-term holiday accommodation. (Owners may need planning permission for change of use from one class to another.)
From next year, local authorities in Wales will be able to impose a 300% council tax hike on second homes, and to “control the number of second homes and holiday lets in any community”. There are also plans to levy a higher Land Transaction Tax on purchases.
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What prompted the crackdown?
Second homes are blamed for property value inflation that has priced locals, including key workers, out of holiday hotspots such as Gwynedd and Pembrokeshire, where around one in five houses are now secondary dwellings, and property prices jumped by 15% last year. In many picturesque areas of the UK, there are concerns that communities are being “hollowed out”.
In parts of Wales, this builds on historical opposition by nationalist and Welsh-speaking groups to an influx of second-home owners from elsewhere in the UK which, at its most extreme, manifested in a spate of arson attacks in the 1980s. (“Come home to a real fire,” ran a spoof contemporary ad. “Buy a cottage in Wales.”)
Violent activism is now rare, but the sense of injustice about sky-high levels of outside ownership is palpable. In the seaside village of Cwm-yr-Eglwys in Pembrokeshire, for instance, only two out 50 properties now have permanent residents; only one is Welsh.
Are other areas following the Welsh example?
Yes. The Government has declared “war” on second-home owners, said The Daily Telegraph last month. In England, a review into Airbnb and holiday homes in tourist towns has been launched as part of the “levelling-up” programme, and the screws are being tightened financially.
In January, a tax loophole was closed, preventing second-home owners from designating often-empty properties as holiday lets – which enabled them to avoid paying council tax and to get small-business rates relief.
Local authorities in England will shortly have powers to double council tax on second homes not in use, or let out, for at least 70 days a year. Scotland is rolling out a tough statutory licensing scheme for the owners of holiday lets.
In 2016, St Ives in Cornwall banned the sale of any new-build home as a second residence. Whitby in Yorkshire and Brighton look set to follow suit.
Why are these measures needed?
Because, say campaigners, a high level of second-homes ownership causes major social problems. It creates offseason ghost towns, with empty homes, closed shops, and doctors’ surgeries with no patients. Second homes “are a luxury that deprives other people of a necessity”, said George Monbiot in The Guardian.
In Cornwall last summer, there were more than 10,000 properties listed on Airbnb for holidaymakers, but just 69 offered on Rightmove for rent to residents. “While tourists surf, residents sofa-surf.”
And in recent decades, the phenomenon has grown fast. In 2008-09, English households owned a total of 279,500 second homes in the UK. By 2018-2019, that had grown to 495,000. And the market has boomed in the pandemic.
What sparked that boom?
People facing the prospect of months cooped up in city homes went on a buying spree, assisted by employers who changed policies to allow remote working. The estate agent Knight Frank estimated that sales of second homes by Londoners increased by 309% in 2020 against 2019.
There were also other long-term drivers: the availability of easy money at super-low interest rates; the arrival of online short-term rental sites, such as Airbnb, which attracted investors to holiday lets; and the stamp-duty holiday. New residency rules and added red tape following Brexit may have also reduced the appeal of buying a second home in Europe.
Are second homes as bad as all that?
Second homes – particularly busy holiday lets – bring money and work to areas that need them: tourism accounts for about 24% of Cornwall’s economy, for instance, and one in five jobs. Some argue that the second-home owners are being scapegoated to cover up for the failure of local authorities to build sufficient social housing, and for fundamental problems of scarce rural employment and low wages.
And for every argument about the social injustice of second homes, there’s another to be made about the rights of individuals to invest and to live where they please in a free society. Punishing them smacks of the politics of envy. No one has a right to live where they grew up: all over the richer parts of the UK, “locals” have been priced out of their native areas.
What might happen next?
The new measures may have unintended economic consequences. Banning the sale of new builds as second homes depresses prices, which is good news for local buyers in the short term, but in the long term might also discourage development, and thus the supply of affordable housing.
There is some evidence of this already in St Ives. Business owners in some hotspots fear that running holiday lets will become unviable under the new regulations – jeopardising the tourist industry. It also seems that the economic cycle is turning: there are already indications that the cost of living and rising interest rates are calming the second-homes market.
In the long run, though, visitor numbers will only grow: “overtourism” is a problem around the world, and a holiday home remains a cherished aspiration for many in the UK. Ways will have to be found to balance the benefits of second homes with the needs of local communities.
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