Can tougher rules and higher taxes for second home owners finally ease the UK housing crisis?

From the Welsh coast to the West Isles of Scotland, an invasion of second home owners has created a housing crisis in key UK holiday destinations.

In an effort to keep homes in the hands of locals, Salcombe in Devon is trying something new, adopting the country’s strictest rules to ensure all new homes are used as primary residences in perpetuity.

With house prices average in the town dubbed Chelsea-on-Sea at £ 950,325, and more than 57% of properties now second homes, one could suggest that the Conservative South Hams Council is closing the stable door after the horse has locked. But local lawmakers hope the new rules will prevent well-heeled second home hunters from taking advantage of a previous loophole that allowed new homes to slip into the second home market when sold.

Under the new rules, developers are legally required to register a Section 106 agreement on title deeds of any new construction, replacing the simpler “planning conditions” that tended to be “misplaced.” by the owners at the time of sale.

According to Halifax, Salcombe is now Britain’s most expensive seaside town, but the upscale seaside resort is far from the only destination to fall victim to its own success. Covid has supercharged the housing market in beach towns and inland vacation hot spots as the shift to working from home has led to increased demand from city dwellers looking to invest in secondary properties.

The average price of a house in a British seaside town now stands at £ 265,978, a 10% jump last year, according to Halifax. In St Mawes, Cornwall, prices jumped nearly half (48%), from £ 339,912 to £ 501,638. Such a price explosion puts pressure on key workers and other locals, whose wages cannot compete with out-of-town buyers when it comes to securing their share of the limited housing stock.

And while tourist towns can benefit from increased visitor numbers, even hospitality suffers as staff cannot afford to live where they work.

Housing tax on second homes has doubled in Gywnedd, with its views over Snowdonia

Jeff Gillard, 43, has lived in Salcombe since he was 16. Director of a seafood export company, paramedic and RNLI volunteer, he rents a T3 he shares with a friend.

He said I: ‘I have no hope of going up the housing ladder, because the wages here just don’t match.

“I’m lucky we’ve been in our apartment for years, so the rent is still relatively affordable, but if I lost this place I would be doomed.” I should definitely move.

“Only two rentals have been posted in the past six months, as most are posted on Airbnb. One was for six months in the winter and the rent was well over £ 1,000 a month.

“The RNLI relies on the presence of local volunteers around the clock.

Older members rose through the housing ladder years ago, but as the teams get younger it will become a major issue if our volunteers cannot afford to live in the city.

“I don’t think the council changes are going to make a difference – people will try to get around the rules by pretending that a house is their primary residence.”

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Local councils have been seeking solutions to the second home crisis for years. In 2016, St Ives, Cornwall became the first town to ban the sale of new builds as second homes. Other vacation spots in Cornwall have followed suit.

Dozens of small seaside towns and parishes in Devon, from Georgeham to South Huish, intend to institute their own policies to prevent communities from becoming tourist traps in the summer and ghost towns in the winter.

Holyrood is also planning to introduce its own legislation which would give Scottish councils greater autonomy to create planning rules that favor local buyers.

With around 25,000 second homes in Scotland, SNP hopes to help young people who grew up on the Isle of Skye, the Western Isles and Argyll and Bute, who are competing with foreigners for a place on the housing ladder.

Previous efforts to discourage second home buyers, including the removal of a 10 percent reduction in the residence tax on second homes and an additional 4 percent on the land transaction tax and real estate, had little effect.

In April, a petition calling for action to end the housing crisis on the Isle of Skye, where one in 10 houses is now a second home, was signed by more than 2,500 residents, citing a threat to its Gaelic language and culture. A cover letter compared the situation to Clearances, a period in the 18th and 19th centuries when tenants in the Highlands and Scottish Isles were mass evicted by their landlords.

The Welsh Language Society, Cymdeithas yr Iaith Gymraeg, has similar concerns for its villages, and last year Wales became the first country in the UK to give local authorities the power to collect an increase of 100 % of the housing tax on second homes.

In the postcard town of St Davids in Pembrokeshire, city council tax rates have been increased by 50% for owners of second homes and 100% for unoccupied houses, with tax funds earmarked for the construction of 18 new affordable homes. for local populations.

Gwynedd, located in a prime tourist location between the Irish Sea and Snowdonia, has chosen to tax 100% in full. One in 10 houses in the region is registered as a second home, the highest rate in Wales.

While some owners of second homes say they feel “discriminated against”, Julie James, Welsh Minister for Climate Change, in charge of housing, has pledged to go even further to “put equity back into the housing system” .

A Welsh government review of the crisis, announced in July, is expected to close a second city council tax loophole that allows homeowners who rent their home for at least 105 days a year (it must be ‘available’ for 210) to avoid paying anything by registering as a corporate taxpayer instead.

The measure may also mask the actual number of second homes in tourist towns, which is likely much higher than the official tally of 24,873.

With the UK government leaving local councils and devolved administrations to handle the problem, there is unlikely to be a slowdown in the second home rush anytime soon.

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