Why second homes are a problem for housing in the UK

Second homes are the latest target of a crackdown in a bid to take on the housing crisis.

With soaring house prices and rents, the housing market has an affordability problem with many of the people who would like to buy a home or need an affordable place to live unable to find one.

But that’s not the case for everyone. Just under 10 per cent of the general population has a second home and in tourism hotspots like Cornwall, Wales and parts of the north-east of England they can be so numerous that they can leave little room for residents.

This is at a time when more than one million households are on a waiting list of a social home after years of seeing council housing sold off into the private sector. There are now 1.4 million fewer households living in social housing in England alone than there were 40 years ago.

This summer has seen efforts to tackle second homes ramped up, with local leaders in Brighton, the Welsh government and the Westminster government all considering methods to crack down on them.

What is defined as a second home?

A second home is a property where the owner does not spend the majority of their time and can be a home used for commuting to work or as a holiday home. While they can often be left unoccupied for large parts of the year, they are judged to be different from empty homes in that they are not “substantially unfurnished”.

Why are second homes a problem?

Second homes can be an issue because there is a housing shortage in the UK.

House prices and rents have both risen significantly in the last year across the country and one of the contributing factors to that issue has been lack of affordable homes.

Second homes can eat into housing supply, especially in coastal areas where lots of unoccupied homes can turn towns and villages into ghost towns outside of the holiday season, affecting jobs prospects and the local economy.

They can also be turned into a holiday let, available to rent out on Airbnb or other short-term let sites. A second home can be registered as a small business if it is available as a holiday let for more than 140 days in a year.

Second homes also pose a problem for the transparency of UK politics.

Transparency International UK’s (TIUK) analysis of parliamentary disclosures revealed 40 per cent of MPs and peers had a registered interest in property with 177 MPs owning 312 residential properties between them – collectively worth more than £31million. That means just over a quarter of MPs have a second home, three times higher than the 9 per cent of households in England.

While some MPs may have a second home for work purposes, 113 MPs generated “significant” rental income from a second property, which parliamentary rules define as £10,000 or more annually. TIUK estimated these MPs receive a combined £2.6m a year in rent but said the true figure is likely to be much higher.

“With parliamentarians far more likely to own second homes than the general population, it’s reasonable to question how representative their experience is of the housing crisis and whether this has some bearing on the political appetite for change,” said Daniel Bruce, TIUK chief executive.

How many second homes are there in the UK?

An estimated 772,000 households have second homes, according to the English Housing Survey, including 495,000 located in the UK.

In Wales there were just under 24,000 second homes registered in the country at the beginning of 2022 while there is an almost identical number in Scotland as of September 2021.

A recent BBC study found the number of holiday lets in England has risen by 40 per cent in the last three years. The overall number of holiday lets, taken from data provided by 152 councils, stood at 27,424 in 2021 compared to just 19,543 in 2018.

What is being done to stop people leaving second homes empty?

In previous years it has been up to communities themselves to say no to second homes.

That was the case in St Ives in Cornwall in 2016. A referendum was held to put the decision in the hands of residents on whether to ban second homes – and more than 80 per cent of the 12,000 parishioners backed it. That introduced a neighbourhood plan that blocked the building of new homes unless they were reserved for full-time residents.

There have been similar actions taken elsewhere, including Whitby in North Yorkshire and Beadnell in Northumberland.

But the measures have not managed to stem the tide of holiday homes – Morag Robertson of St Ives Community Land Trust recently told The Guardian that residents “should have gone further” to rid the beauty spot of second homes.

More action is being taken in 2022.

Brighton is also looking at blocking new builds from becoming second homes, which would make it the first city in the UK to do so.

The Green-run council is currently exploring the plans after they were proposed by Labour councillor Gill Williams in June. Williams said: “Our city is at the sharp end of the housing crisis. The Greater Brighton area faces a ‘lost generation’ of working age people and families. We are in danger of losing whole classes in our local schools due to the lack of affordable housing pricing people out of the area.”

The Welsh government has announced a planning shake-up to beef up its own response to the issue.

While rules are already in place to give councils the power to increase council tax premiums on second and empty homes, ministers have opened a consultation on varying land transaction tax locally in areas with large numbers of second homes.

Three new planning use classes – a primary home, a second home and short-term holiday accommodation – will be introduced at the end of the summer. Local authorities will have the ability to control the number of second homes and holiday lets through the national planning policy too.

“Tourism is vital to our economy but having too many holiday properties and second homes, which are empty for much of the year, does not make for healthy local communities and prices people out of the local housing market,” said Welsh first minister Mark Drakeford.

“There is no single, simple solution to these issues. Any action we take must be fair. We do not want to create any unintended consequences, which could destabilise the wider housing market or make it harder for people to rent or buy.”

Housing secretary Michael Gove has also spoken out about tackling the “scourge” of second homes.

Proposed government plans to regulate second homes and holiday lets reportedly include surprise inspections and bans to stop second home owners from renting out their homes as short-term lets for 90 days or more.

Gove’s proposed tweaks are laid out in the Levelling Up and Regeneration Bill which was announced at the Queen’s Speech in May and is currently making its way through parliament.

As it stands, the bill gives power for councils to double council tax for second homes and long-term empty homes after a year of being empty.

However, second homes will not be treated the same as homes which are left vacant, with council tax rates increasing the longer a property is empty, up to five or 10 years.

The plan, which would introduce discretionary powers for local authorities to hike up council tax by up to 300 per cent, has the backing of the Local Government Association.

“From the coasts of the south-west and rural ghost villages of the Cotswolds to the empty Thames-side towers of Nine Elms and Southwark in London, the second homes crisis and Airbnb explosion continue to squeeze housing supply,” said Chris Bailey, national campaign manager at Action on Empty Homes.

But what does Airbnb make of all of this?

The short-term lets giant told the House of Lords’ Built Environment Committee in May that there was “no evidence” linking the business with a shortage in housing.

Amanda Cupples, general manager of Airbnb Northern Europe said: “The reality is, we don’t know very much. There is actually no evidence base that has drawn any link whatsoever between short-term accommodation and housing scarcity.”