In the first Covid-19 lockdown, Selaine Saxby noticed how empty her village had become. “I live on a close of 30 homes of which only five were occupied,” said Saxby, the Conservative MP for North Devon. Second homes were left vacant and holiday homes unlet as the pandemic spread, illustrating how much of the nation’s picturesque towns and villages were owned by people who lived somewhere else. Later, remote working by City dwellers keen to grab a slice of countryside and a boom in staycations meant many Devon towns became swamped.
Ilfracombe on Devon’s north coast has seen a 52% increase in house prices since 2021, largely as a result of second home buyers, says Saxby. Over the same period there has been a 67% drop in long-term rentals to locals.
Second homes are in the government’s sights after Jeremy Hunt reacted to complaints from the likes of Saxby in his spring budget. The chancellor said he wanted to encourage second-home owners to offload their properties when he announced higher taxes on holiday lets and lower taxes on second-home sales. But no English council has followed the example of Wales and increased council tax on second homes. Next month, Gwynedd council, which covers the area on the north-west coast around Bangor, is expected to go further.
The Plaid Cymru-run authority will consider responses to a six-month consultation over amendments to planning consents, which relate to development. Under the proposed scheme, homeowners must register their properties as either a main home, second home or holiday let. Once in place, the council would have the power to reject an application to change status.
According to Craig ab Iago, cabinet member for housing, it may be 30 years since the campaign group Meibion Glyndwr set fire to 200 English-owned holiday homes to highlight the lack of affordable accommodation, but local objections to wealthy incomers driving up prices are still burning brightly.
“There are lots of people who have responded saying the council wants to discriminate against the English coming to this part of the world,” he said. “That we are racist towards the English. And those who say second home owners are evil.”
Ab Iago said second-home owners fell into three categories – local people owning a property to supplement their income or house a relative, visitors who for decades have spent months in the area each year, and a more recent investment trend. It is the last factor that has convinced him that, without control over the status of housing and who can buy it, the area will soon be overrun with Airbnb holiday lets.
“We can build as many homes as you like, but without control of the demand and who buys, none of the homes will go to local people,” he said.
Last April, Gwynedd council applied a 150% surcharge on the council tax of second homes, and research by council officers shows there was a swift reaction from homeowners. Last year, Gwynedd had about 8,000 second homes out of 55,000 households. Data showed that by November, 500 second homes in the county had delisted compared with November 2022. Ioan Thomas, the cabinet member for finance, said he and his colleagues were convinced the extra council tax and the consultation on planning was having an effect.
However, more research was needed because there was “not enough evidence to say the reduction in second homes was due to the effect of the premium itself,” he said.
There is pressure from locals to use the full weight of council tax against second-home owners, after the Cardiff government lifted the cap to 300%. Ab Iago said Gwynedd had a £6m overspend on housing homeless people, while 3,600 people were on waiting lists for social housing.
In Westminster, the chancellor stepped in where many councillors fear to tread, with three measures in his spring budget he expects will raise money for the exchequer and heap extra pressure on second-home owners to sell up.
Hunt’s carrot was a cut in capital gains tax on sales from 28% to 24%, which is expected to raise £310m in receipts in the next financial year, as second-home owners race for the exit. Those that run holiday lets will be further encouraged to exit by the abolition of tax breaks allowing them to write off most of their expenditure against tax. A third measure denies a stamp duty tax break previously offered to people who bought several properties as an investment. The Treasury believes this last measure was abused by the super-rich buying stately homes with outbuildings and cottages in the grounds, which they classified as extra properties.
Labour’s shadow housing minister, Matthew Pennycook, has suggested the government could provide local authorities in England with powers to introduce licensing regimes for second homes and short-term lets. Saxby supports a registration scheme for the 2.5m second homes in the UK, making it easier for councils to keep tabs on who is renting them out.
Michael Gove, the levelling up, housing and communities secretary, has travelled part way along this path, saying last month that he will create a register of short-term holiday lets and second-home owners who want to let houses on Airbnb, forcing them to obtain planning permission from this summer.
But the government also intends to give landlords a “permitted development right” to change rented properties into holiday accommodation without planning permission, undermining planning reforms and preventing English authorities from following the Welsh example.
Labour-controlled Westminster council is among those that envisage an exodus from long-term rentals to holiday lets, despite Hunt’s tax changes.
In Gwynedd, the pincer movement on second homes and holiday lets is having some real-world effects. Michael Williams, partner at the local estate agents Morris, Marshall & Poole, said the area remained attractive to incomers, but many of those who had been visiting a second home for decades were poised to sell: “I don’t think it is making a big difference yet to who buys second homes in the area, but it is having an impact on those who already own second homes.
“Many of them are property rich but cash poor and the extra tax is proving to be a problem. Some are thinking of selling up, but they need to be careful not to flood the market. Values are holding up at the moment, but the full effects [of the tax] are likely to really take effect over the next year.”
In Devon, Saxby wants to achieve a balance of holiday lets and second homes with a greater proportion of long-term rental properties in her area. The issues are similar to those in
Gwynedd. “We have 50 families in a holiday park at the moment because we don’t have homes for them, and 3,000 on the housing waiting list,” she says. “The situation is very difficult.”
