Six reasons not to buy a second home or holiday let in Wales
With the demand for ‘staycations’ within the UK on the up and house prices ballooning, second homes are proving to be a canny investment for those who want to see their savings go further as well as get away from it all.
Wales meanwhile has seen its number of second homes and holiday lets increase quickly as buyers take advantage of a booming tourist trade as well as low house prices.
However, while Wales welcomes anyone who wants to make the country their home, there are also good reasons not to buy a second home here. Here are six of them.
1.) It’s making homes unaffordable for local people
Wales has a lot of second homes, with figures from July showing that four times as many houses were sold as second homes in Wales compared with the UK average.
But second homes tend not to be evenly distributed throughout Wales but rather concentrated in some areas, particularly the north and west of the country. In the county of Gwynedd in the north-west, one in every 10 houses in the county is now a second home.
These are among the poorest areas in Wales where houses are cheap. However, second home buyers also push up house prices, often beyond the reach of those who live in those areas.
Across Wales, the average home sold costs the equivalent of six times the average annual disposable household income.
However, the west of Wales specifically has seen the biggest gap grow between house prices and their affordability to local people in the whole of the UK.
While relatively cheap houses in Wales may look attractive therefore as a second home option, it’s worth remembering that they are relatively cheap for a reason – because their price is a reflection of the ability of local people to afford them.
If people from outside those communities buy them as second homes, that pushes those prices up beyond the reach of local people.
2.) It’s turning communities into ghost towns
As local people move away due to the lack of affordable housing, towns and villages popular with second home buyers are increasingly empty outside of the holiday season.
The most famous example of this is Cwm-yr-Eglwys in Pembrokeshire where only two of the 50 houses in the village now have permanent residents.
Another example of this phenomenon at work is in Abersoch, a rural village which has become one of the most expensive postcodes in Wales where the primary school (above) has closed down due to a lack of children.
These were once thriving year-round communities but beyond a few months in the summer now lie largely empty.
Fewer year-round residents also mean that there is less call for businesses to operate in an area, causing problems in the local economy too.
3.) It’s having an impact on emergency services
A related impact of expensive homes and a lack of year-round residents is that on the emergency services.
It makes it difficult for nurses, teachers, firefighters and those working on lifeboats to live locally and the lack of year-round demand means that there is less call for local infrastructure such as hospitals.
The Welsh Housing Justice Charter campaign group said it regularly received calls from those working in the emergency services who said they could no longer afford to live near where they worked and volunteered.
But that could also mean that what little provision there is then comes under a large amount of pressure during the summer months when there is an influx of visitors.
4.) It’s having an impact on the Welsh language
Many of the most popular areas for holiday homes, including Anglesey, Gwynedd and Ceredigion, are also some of the last remaining communities where a majority of people speak the Welsh language.
The Welsh language is spoken all over Wales, but in these coastal, rural areas it has retained its status as a community language.
Campaign groups argue that the rise in the number of second homes and holiday lets are hollowing out these communities.
Children who have been educated in the Welsh language also see little hope of being able to afford a home and therefore move away.
5.) The Welsh Government is clamping down on second homes and holiday lets
Second homes are a live political issue in Wales attracting large-scale protests.
The Welsh Government has said that it considers the above factors to be a problem and as a result are currently consulting on a series of measures to clamp down on second homes and holiday lets.
First Minister Mark Drakeford said that “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”.
From next April the Welsh Government will allow councils to set council tax premiums on second homes and long-term empty properties to 300%.
The criteria for self-catering accommodation being liable for business rates instead of council tax will also change at the same time, from 70 to 182 days.
And with the Welsh Government currently in a co-operation agreement with Plaid Cymru, the Welsh national party, there is likely to be further political pressure for action to reduce the number of holiday lets, particularly closing tax loopholes.
6.) House prices could collapse at any moment
Estate agents have warned that Wales’ house price boom is set to end as the cost of living crisis bites and the market is flooded with new properties.
The housing market also faces headwinds from rising inflation and mortgage interest rates.
House prices in Wales rose at the fastest rate in the UK since the start of the Covid pandemic due to the staycation boom and a ‘race for space’ away from the cities.
But with the pandemic now in decline, those factors could reverse and parts of Wales popular with second home buyers are expected to see the biggest crash across the UK.
The data showed that rural and coastal holiday areas, where second homes are common, had already recorded the biggest falls in demand.
Even from a purely self-interested perspective, therefore, buying a house now as an investment for use as a second home or a holiday let could be a bad move.
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Interesting article. Today I watched a brief report from BBC on 1 o’clock news about the holiday home/second home/airbnb crisis in a part of North Devon around Woolacombe. Pleasant looking village has been gutted by outside money. Locals unable to find homes or afford to compete in local sell and rental markets. This is now becoming a bigger crisis in England hence the Beeb’s interest.
There are instances where people buy second homes because they work in the area. They spend 4/5 days in their second home whilst at work and return to their ‘first’ home for 2/3 days. Actively seeking to exclude people from outside an area risks creating an inward looking community which lacks diversity. There are many examples (Aberystwyth and Aberaeron two I know of) where social housing and affordable rentals are often easily accessed by local people. However, people from outside the area are taking up the social housing opportunities. In other words in many communities there is enough affordable housing… Read more »
John says – Local authorities and housing associations are importing problem families from outside of the area (from Manchester and Birmingham for example) and providing affordable accommodation for them (and obviously receiving an income in the process). Correct. Not only do these incomers jump any sort of queue that exists in these depleted areas but they add to the invisible social costs with evidence of disruptive behaviours in schools and petty crime out in the communities. They don’t have a monopoly on negative behaviours but they certainly bump up the totals significantly.
That is a national scandal that the Senedd should be debating with a view to putting a stop to it. Likewise the greenwashing scam.
These new schemes are only deflecting the main issues. The fact local governments have failed to build the necessary social housing for a number of years and place the necessary covenants on new builds to prevent use as second homes/holiday lets.