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Wales’ second home surge pricing renters out of coastal communities, new research finds

27 May 2022 4 minute read
Tenby Harbour. Photo by Beata Mitręga on Unsplash

A surge in second homes is pricing renters out of Wales’ coastal communities, new research has found.

The statistics published by the campaign group Generation Rent show that Wales and South West England saw both the largest increase in holiday home ownership and the largest rise in rents over the course of the pandemic.

Thousands of properties in Wales were bought as holiday homes or switched from the private rented sector between March 2020 and August 2021. In the same period rental listings halved, sending rents surging by 17%.

Dan Wilson Craw, Deputy Director of Generation Rent, said: “The popularity of domestic holidays last year, combined with the lack of regulation and tax advantages has fuelled the appetite for holiday homes and deprived renters of places to live.

“We’ve heard countless stories of people being evicted so their landlord could start renting to tourists.

“Taking homes out of the residential market prices out people who want to settle down in the place they grew up. That destroys communities and starves local businesses of workers.

“The government must step in to incentivise landlords to let to tenants instead of tourists. This involves removing tax advantages from holiday lets, and giving councils powers to license holiday lets and impose substantial council tax premiums on holiday homes.”

‘Consequences’

According to Zoopla data analysed by Generation Rent, in Wales, rental listings on Zoopla fell from 7,237 to 3,143 in the same period, with the average rent rising from £155 to £181.

Generation Rent said they were calling for more government action to bring properties back into the residential market, including scrapping mortgage tax relief for holiday lets, and powers for councils to license holiday lets and charge additional council tax on homes that are not primary residences.

Holiday homes can either be registered as second homes for council tax, or commercial holiday lets for business rates. In Wales, the number of second homes and commercial holiday lets increased from 31,779 to 33,474 between 2020 and 2021.

The Welsh Government confirmed last week that they would carry on with plans for tax hikes on holiday lets that do not rent out their properties for more than half the year.

Following a consultation, from April local authorities will be able to set council tax premiums on second homes and long-term empty properties to 300% from April 2023.

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. This will stop second home owners from classifying homes as businesses because they are let out for one fifth of the year.

“As part of the Co-operation Agreement with Plaid Cymru, we are committed to taking immediate action to address the impact of second homes and unaffordable housing in communities across Wales, using the planning, property and taxation systems,” Rebecca Evans said.

“As we continue to progress the package of measures and drawing on the latest evidence base, we will keep under constant review the whole range of levers available to use and how they may be deployed most effectively to meet our policy objectives and avoid any unintended consequences.”

There are 301,221 second homes, with 66% estimated to be used as holiday homes, and 94,928 commercial holiday lets in Great Britain as a whole, and they are concentrated in London, Scotland, Wales and South West England. Just 40 councils contain half of Great Britain’s second homes.

London’s holiday let market crashed in 2020 and did not recover in 2021 due to restrictions on international travel. The number of second homes and commercial holiday lets there fell by 4,688, or 9%. Residential rental listings nearly doubled from 68,699 in February 2020 to 132,885 in August 2020, and market rents dropped by 25%, from £799 per week to £572 by February 2021. In late 2021 this trend has reversed.


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david
david
6 months ago

The reality is their are multiple factors in play, second homes, holiday lets and in the Landlords case greed, you can check what they brought that property for and when, for example I found a property brought in Bridgend County back in 2002 for 24K totally liveable in, since then they have changed carpets, kitchen and bathroom, say cost 10K max, the property now is for rent at £800, yes they may well get this amount but they do not need to charge anywhere near this figure, the mortgage would or should have been paid off long ago, its double… Read more »

Richard
Richard
6 months ago

I very recently changed car and needed a new CYM sticker for it – so went to a shop selling them in coastal Gwynedd. The owner ( with a manchester area accent ) appologised for only have a couple of Wales ones left and added there had been a recent rush…. Adding they were being snapped up by ‘ locals ‘ including a large number of long standing ‘ english ‘ ( her words ) residents ‘ keen
to show they were NOT second home owners ! 🤔

Last edited 6 months ago by Richard

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