In a sign of the times it has this week been revealed that more UK town councils are looking towards a second home ban to protect those living and working locally. Cornwall Council has already taken a vote on a ban on second home developments in St Ives although this does not extend to properties already in use. Local voters have unanimously backed the move and this looks like opening a doorway for many other town councils across the UK.
As we touched on in some of our earlier articles, there may well be legal challenges with regards to the ban on second home newbuilds. Is this discriminatory? Does this go against a fair and open market? Is this a sign of things to come?
There are now growing concerns that if this move is rubberstamped by the courts and deemed legal then this could well be the thin end of the wedge. Politicians the length and breadth of the UK have been looking at ways to increase taxes on those with second homes. For some time now this has been a popular subject amongst the political elite seen as a means of currying favour with the electorate.
Slowly but surely the cost of owning property, and especially expensive property, in the UK has been rising. We have had politicians tinkering with the stamp duty levels, increase mansion taxes and further costs heaped on those owning UK property but not domiciled here. There are serious concerns that this never-ending pursuit of the UK property market could push investors to other areas of the world which are not as aggressive from a tax standpoint.
Just last year the BBC published a review of the UK second home market after the release of the English Housing Survey. It is very difficult to pinpoint the number of second homes in the UK but it is estimated they number no more than 300,000 which is the indicative figure of second homes which are not rented out. When you bear in mind there are around 28 million dwellings in the UK this is a very small percentage of the market. Has this issue been over blown by the politicians?
Could this policy be counter-productive?
The number of second homes, otherwise classed as holiday homes, varies across the UK with the likes of Cornwall touching a figure of 6% with other areas posting significantly lower figures. It is unclear at this moment in time what impact a ban on second home newbuilds will have as well as the ever increasing tax associated with so-called “holiday homes”. There may well be a danger that targeting second home owners could alienate them and force them to look elsewhere.
This would most certainly have an impact upon local economies and while the likes of St Ives is a thriving holiday destination, would the withdrawal of second home owner expenditure be helpful? It is all good and well attacking property investors with second homes but what are the long-term consequences for local economies?