Ministers are preparing crackdown on second homes and could give municipalities free rein to keep ‘outsiders’ from new properties amid warnings they are ‘squeezing’ the life out of holiday hotspots
- Robert Jenrick plans reforms to give municipalities the power to ban second homes
- They could impose the bans without having to win a local referendum
- The triple clampdown movement will be incorporated into planning legislation this fall
- But there are fears that buy-to-let investors could be squeezed out of vacation areas
ministers are gearing up for a triple take on second homes amid warnings they’re squeezing life out of vacation hotspots.
Community Secretary Robert Jenrick is planning a series of reforms that will give councils the power to ban the construction of new second homes if they are deemed harmful to the local community.
They could impose such bans without first holding and winning a local referendum on the issue.
Municipalities will also be given new rights to urge developers to build more starter homes, rather than focusing on properties likely to appeal to ‘incomers’ looking for a holiday home.
Community Secretary Robert Jenrick is planning a series of reforms that will give municipalities the power to ban the construction of new second homes. Pictured: St Ives Bay in Cornwall
And ministers are considering changing the rules to require owners of a second property to obtain planning permission before renting it out as a holiday rental.
The moves, which will enter into planning legislation this fall, are designed to provide tranquility for communities in areas such as Cornwall, the Lake District and the Cotswolds with high concentrations of second homes.
But they will fuel fears that buy-to-let investors could be squeezed out of legitimate investment in vacation areas. According to the latest government figures, around half a million people have at least one second home in the UK.
A government source last night insisted that ministers were “not anti-second homes.”
But the source said there was a need to address the problem in areas where “extremely high levels” of second home ownership have been blamed on the locals’ pricing away from the housing market.
The most glaring change gives councils the right to take over the powers pioneered in St Ives in Cornwall to ban the sale of new build homes as second homes.
But there are fears that buy-to-let investors will be squeezed out of legitimate investments in vacation areas. Pictured: Property signs outside houses in Stoke-on-Trent
In 2016, the popular seaside town became the first place in the country to ban new second homes after a local referendum on the issue.
The move includes a ban on developers building new homes for the city’s secondary housing market, where about a quarter of the homes are second homes or holiday residences.
Question and answer
What’s the problem?
Only about half a million people own second homes in this country, but some areas such as Cornwall and the Lake District have very high concentrations.
Critics argue that a large number of holiday homes could price locals out of the housing market and harm services.
Proponents say they provide vital income and point out that in many areas, second home owners pay the full rate of council tax.
What is proposed?
Ministers are planning a series of reforms, including making it easier for councils to follow the example of St Ives, which banned the construction of new properties for use as second homes in 2016.
Authorities in the Cornish coastal town had to win a local referendum on the issue, but the new proposals would let councils do so automatically.
Will it work?
A study by the London School of Economics found that the St Ives ban had backfired, with house prices soaring even higher as the supply of new homes for second homes dried up.
But councilors stress that more time is needed to see the full effect.
Can building permit are needed to rent out homes as holiday rentals?
Yes. Currently, people are free to rent out second homes on the holiday market.
The Communities Secretary, Robert Jenrick, is said to be “open” to proposals requiring people to obtain planning permission for a “change of use” before they can rent out their property as a holiday home.
New homes can only be sold to people who can demonstrate that they will be used as their primary residence. A legal battle against the ban has failed.
Under the proposals, councils would not have to win a local referendum on the issue of the kind being held in St Ives before imposing a ban on new second homes.
Critics say the results of the St Ives experiment have been mixed.
A 2019 London School of Economics review warned that the ban could backfire, with developers choosing to build elsewhere and locals facing even more competition from those looking to buy existing properties for second homes.
Study author Professor Christian Hilber said limiting the number of second homes “could have positive effects on amenities and affordability.”
But he added: ‘This always comes at the cost of a significant negative impact on the local economy.
“Any policy that succeeds in keeping investors away from second homes will hurt the local economy, especially the tourism and construction sectors.”
City councilors emphasize that policy must be given more time before a clear assessment can be made. Meanwhile, several other local authorities are considering following St Ives’ lead.
Equally drastic could be the new proposal to oblige people to obtain a building permit for renting out a second home as a holiday rental.
Ministers have not yet taken a final decision on the idea, but Mr Jenrick is said to be “open” to the proposal.
In areas adopting the idea, people wishing to rent out a property for holiday purposes should apply for a ‘change of use’ permit from the municipality.
The plan would affect traditional rentals as well as newer forms such as Airbnb. But it would not be applied retroactively and would not apply to long-term rentals.
The measures are in response to complaints from some local authorities that high levels of second-home ownership can create ‘ghost towns’ and villages, with too few inhabitants year round to support local services.
Critics also complain that locals can be priced out of popular areas.
Ministers have already put an end to the automatic reduction in municipal taxes for second homes, which means that owners in many areas pay the rate in full.
But a government source said ministers acknowledged that holiday homes can also generate vital income in areas where the economy is heavily dependent on tourism.