Second homes a blatant injustice, but UK government encourages them | Georges monbiot
How big would our housing crisis be without second homes? It’s a question hardly anyone in public life wants to ask, let alone answer it. But it is becoming more urgent every day.
By secondary residence, I do not mean a residence permanently rented to another household. I mean a property used either as a personal vacation home or as a place to stay while working away from your primary residence: in other words, a luxury that deprives others of a necessity.
Before the pandemic, according to government figures, 772,000 households in England had second homes. Of these, 495,000 were in the UK. The real number of second homes is higher, as some households own more than one; my rough estimate is just over 550,000. Since then, Covid, Brexit, and the growing awareness that you can monetize your extravaganza by putting your second home on Airbnb when you’re not using it have sparked a rush towards gold.
Far from trying to curb this frenzy, the government has provided subsidies and tax breaks to owners of second homes. If you rent yours out as a “furnished rental” part of the year (it should be “available” for 210 days but must be rented for only 105 days), you no longer have to pay council tax, but you can register as a corporate taxpayer instead. Then you ask for 100% small business rate relief, setting off the entire bill. So while all other types of housing are taxed, second homes, if you play right, are tax exempt.
Under the Restart Grant program, hospitality and leisure businesses registered for business rates are eligible for a freebie of up to £ 18,000. This is in addition to the Closed Business Lockdown Payment of up to £ 9,000, the Small Business Grant Fund of £ 10,000, and the Retail, Hospitality and Leisure Grant: An additional £ 10,000. The stamp duty holiday also applies to the purchase of a second home, saving up to £ 15,000. All the nerves of the state are strained to reward and pamper those who deprive other people of a home.
All of this further fueled a massive spending spree. On the coast and in scenic inland areas, locals report that buying a house has become impossible. Rural prices over the past year have risen by an astonishing 14%: twice the rate for houses in cities.
The result is the death of the community. A survey in Devon this month found villages where between two-thirds and 95% of properties are second homes. In a village in Pembrokeshire, there are still three residents. In Cornwall last month, there were over 10,000 properties listed on Airbnb for vacationers, but only 62 offered on Rightmove for rent to permanent residents. In the Newquay region alone, more than 500 people are believed to be homeless. While tourists are surfing, residents are surfing on the couch.
Homelessness and the demand for housing caused in one place can manifest itself in another. If people can’t find a place to live in, they have no choice but to move and they could end up on the housing list in a less attractive borough. Displaced demand can spill over into the entire housing industry as people jostle along the chain.
The environmental implications are also enormous. If you have two houses, another house must be built to accommodate the household you moved. In other words, you’ve doubled your housing footprint. The prosperous people of the counties, rightly opposing Boris Johnson’s proposal to demolish town planning laws, might wonder if they helped provoke the problem he mistakenly claims to solve.
So to what extent is the housing crisis caused by second homes? Well, it depends what crisis you’re talking about. Let’s start with its most extreme manifestation: roaming. According to one estimate, there are 288,000 households in England that are homeless or in imminent danger of becoming homeless. So on this measure, we discover something really obscene: there are about twice as many second homes as homeless households.
Of course, that is by no means the whole story. There are 1.6 million households on the social housing waiting list. The level of unmet need could rise further, now that the Covid deportation ban has been lifted.
But just as homelessness is an extreme and visible symptom of a much bigger problem, so too are second homes. Although we need to build a lot more social housing, the underlying reason for high housing prices is not a lack of supply. The number of dwellings in the UK has grown faster than the number of households, and there are now more bedrooms per person than ever before. The problem is the grossly unequal distribution of space. Houses are unaffordable because of the purchasing power of homeowners and speculators, and their use as an investment. Government figures show that even if 300,000 new homes are built each year for 20 years, house prices will only be 6% lower in real terms than they would have been otherwise.
What we need, in any case, is an effective policy. We could decide, as a nation, that vacation rentals are large enough to make others homeless or to trigger demand for new housing elsewhere. After all, we need vacations, and coastal and scenic communities want income from tourists. But good policy doesn’t just happen. As we proposed in the Land for the Many report, local authorities should be able to decide how many houses in a village or town should be permanent residences and how many should be vacation rentals. Any second home, existing or planned, would need a building permit for change of use.
In Wales, local authorities can charge double the council tax rate for second homes. But, while this power is contained in Westminster legislation, it does not apply to the rest of the UK. Even so, its usefulness is limited, now that second home owners have discovered that they can register as businesses, pay nothing at all, and be rewarded for it. We need a progressive property tax, based on value and payable by owners, not tenants. And second homes should be taxed at a much higher rate.
So why is this urgent issue not on the political agenda? Well, in part because almost everyone who matters in public life – including many MPs, editors, and seasoned journalists – seems to own a second home. This is how we end up with a cruel and divided nation, in which wealth causes poverty and greed supplants need. It is not enough to revolt against Johnson’s attack on town planning laws. We must also fight against a blatant injustice.
This article was corrected on June 28, 2021. Seasonal furnished rentals must be available for 210 days, but must only be rented for 105 days; an earlier version incorrectly used the obsolete figures of 140 and 70 days respectively.