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Second homes and affordable housing

  • by JW

Using council tax premiums on second homes to build affordable housing.

But tax loopholes, shortage of council land and Airbnb are issues.


The well-to-do have been renting and buying holiday accommodation in Sidmouth since the resort became fashionable some two centuries ago – and it continues to be the case:

Futures Forum: Sidmouth has the largest number of second home sales in East Devon

There have been efforts, though, especially over the last decade to limit this:

Futures Forum: The West Country: taxing second homes

With Cornish towns making the greatest efforts:

Mevagissey is following St Ives’ lead to stop too many properties becoming second homes. – Vision Group for Sidmouth

However, it seems that “prices of new-builds have fallen—but so has construction”:

The unintended consequences of St Ives banning new-build second homes > ‘Excluding new-builds, prices have continued to climb.’ – Vision Group for Sidmouth

There had been plans to do likewise in the Sid Valley:

Sid Valley Neighbourhood Plan > first plan for East Devon banning new builds as second homes – Vision Group for Sidmouth

Indeed, the Sid Vale Neighbourhood Plan had initially proposed a similar measure covering all new-builds – but now this has become a more specific regulation against any new housing in the AONB becoming second homes:

Read a referendum version of the Neighbourhood Plan  or the Examiner’s Report

But even such measures can be circumvented:

Second homes ‘tax loophole’ review – Vision Group for Sidmouth

The news today, however, is that in Wales, more is indeed possible:

Eighteen affordable homes will be built in a Pembrokeshire village thanks to a grant funded by council tax premiums on second homes…

A council tax premium of 50% on second homes in Pembrokeshire was introduced during 2017-18 while a 25% premium on properties empty for three years or more followed in 2019-20.

Solva affordable housing to be funded by second-home council tax – BBC News

And this is due to a piece of Welsh legislation:

Guidance on the Implementation of the Council Tax Premiums on Long-Term Empty Homes and Second Homes in Wales

Which allowed councils to spend on affordable housing:

Anglesey and Pembrokeshire hike second-home council tax – BBC News

Although there are also ways of avoiding the new tax even in Wales:

Second homes tax ‘loophole’ worry – BBC News

Claims that second home loophole is costing Anglesey council £1m a year | North Wales Chronicle

The UK government does indeed have similar, if more limited, powers to councils:

Council Tax: Second homes and empty properties – GOV.UK

However, one of the biggest issues beyond tax loopholes is finding the land to build on:

Futures Forum: “Making the case for affordable housing on public land” >>> >>> Or: Why doesn’t the District Council build affordable housing on its own land?

The District Council made use of a car park in Sidmouth to positive effect:

Futures Forum: Affordable Housing in Sidmouth: DCH and EDDC: project in Mill Street completed

Futures Forum: Affordable housing in Sidmouth: DCH and EDDC

Perhaps the most pressing problem of late has been the rise of the so-called ‘sharing economy’:

The Gwynedd coastal town demanding more powers to stop AirBnB and holiday home takeover – North Wales Live

Especially in the West Country:

Airbnb harming homeownership in rural areas – Rural Services Network

Summer rentals to pay off the mortgage: the village changed by Airbnb | Airbnb | The Guardian

Indeed, it’s quite an issue, as covered recently in the States:

The Future of Airbnb – The New York Times

And for some time by the FF blog:

Futures Forum: Airbnb: tourists, local residents and the sharing economy

Futures Forum: Airbnb and irresponsible tourism

Futures Forum: The sharing economy >>> Upstarts disrupting communities