Second homes are a gross injustice, yet the UK government encourages them

How big would our housing crisis be if it were not for second homes? It’s a question almost no one in public life wants to ask, let alone answer. But it becomes more urgent every day.

George Monbiot www.theguardian.com 

By a second home, I don’t mean one continuously rented to another household. I mean a property used either as a personal holiday home or as a place to stay while working away from your main home: in other words, a luxury that deprives other people of a necessity.

Before the pandemic, government figures show, 772,000 households in England had second homes. Of these, 495,000 were in the UK. The actual number of second homes is higher, as some households have more than one; my rough estimate is a little over 550,000. Since then Covid, Brexit and the growing realisation that you can monetise your extravagance by putting your second home on Airbnb when you’re not using it have triggered a gold rush.

Far from seeking to restrain this frenzy, the government has lavished subsidies and tax breaks on second-home owners. If you rent yours out as a “furnished holiday let” for part of the year (it should be “available” for 140 days but needs to be let for only 70), you no longer have to pay council tax, but can register instead as a business ratepayer. Then you apply for 100% small business rates relief, cancelling the entire bill. So while every other kind of housing is taxed, second homes, if you play it right, are tax-free.

Under the restart grant scheme, hospitality and leisure businesses registered for business rates are entitled to a gift of up to £18,000. This comes on top of the closed business lockdown payment, of up to £9,000, the small business grant fund, of £10,000, and the retail, hospitality and leisure grant: a further £10,000. The stamp duty holiday also applies to buying a second home, saving up to £15,000. Every sinew of the state is strained to reward and cosset those who deprive other people of a home.

All this has further fuelled a massive spending spree. On the coast, and in scenic areas inland, local people report that buying a home has become impossible. Rural prices over the past year have risen by an astonishing 14%: twice the rate of homes in cities.

The result is community death. A survey in Devon this month found villages in which between two-thirds and 95% of properties are second homes. In one village in Pembrokeshire, there are three remaining residents. In Cornwall last month, there were more than 10,000 properties listed on Airbnb for holidaymakers, but just 62 offered on Rightmove for rent to permanent residents. In the Newquay area alone, more than 500 people are reckoned to be homeless. While tourists surf, residents sofa-surf.

Homelessness and housing demand caused in one place can manifest in another. If people can’t find a home where they want to live, they have no choice but to move, and they might end up on the housing list in a less attractive borough. Displaced demand can ripple through the entire housing sector, as people bump each other along the chain.

The environmental implications are also massive. If you own two homes, another home has to be built to accommodate the household you’ve displaced. In other words, you’ve doubled your housing footprint. Prosperous people in the shires, rightly objecting to Boris Johnson’s proposal to rip down the planning laws, might ask themselves whether they have helped cause the problem he falsely claims to be solving.

So how much of the housing crisis is caused by second homes? Well, it depends which crisis you mean. Let’s start with its most extreme manifestation: homelessness. On one estimate, there are 288,000 households in England that are homeless or in imminent danger of becoming so. So on this measure, we discover something truly obscene: there are roughly twice as many second homes as homeless households.

Of course, this is by no means the whole story. There are 1.6 million households on the social housing waiting list. The level of unmet need could rise even further, now that the Covid eviction ban has been lifted.

But just as homelessness is the extreme and visible symptom of a much bigger problem, so are second homes. Though we need to build far more social homes, the underlying reason for high house prices is not the lack of supply. The number of dwellings in the UK has been growing faster than the number of households, and there are now more bedrooms per person than ever before. The problem is the grossly unequal distribution of space. Houses are unaffordable because of the purchasing power of landlords and speculators, and their use as investments. Government figures show that even if 300,000 new homes are built every year for 20 years, house prices will be only 6% lower in real terms than they would otherwise have been.

What we need, in all cases, is effective politics. We might decide, as a nation, that holiday lets are important enough to make other people homeless, or to trigger demand for new housing elsewhere. We do, after all, need holidays, and coastal and scenic communities want income from tourists. But good policy doesn’t happen by itself. As we proposed in the Land for the Many report, local authorities should be able to decide how many of the homes in a village or town should be permanent residences, and how many should be holiday lets. Any second home, existing or envisaged, would need planning permission for change of use.

In Wales, local authorities are able to charge double the rate of council tax for second homes. But, though this power is contained in Westminster legislation, it doesn’t apply to the rest of the UK. Even so, it’s of limited use, now that second homeowners have discovered that they can register as businesses, pay nothing at all, and be rewarded for it. We need a progressive property tax, based on value and payable by owners, not tenants. And second homes should be taxed at a much higher rate.

So why isn’t this urgent issue on the political agenda? Well, partly because almost everyone prominent in public life – including many MPs, editors and senior journalists – seems to own a second home. This is how we end up with a cruel, divided nation, in which wealth causes poverty and greed displaces need. It’s not enough to revolt against Johnson’s attack on the planning laws. We also need to fight a gross injustice.

2 thoughts on “Second homes are a gross injustice, yet the UK government encourages them

  1. George mentions “community death” which is the result of the second homes influx in our villages.

    What is “community death”?

    It is the loss of the local young families in a village as house prices are unaffordable and are bought as holiday lets or Airbnb or just left vacant for much of the year
    .
    It is an elderly person with nobody living permanently on either side of them. Nobody who will respond to the emergency button.

    It is the loss of friends who greet you when walking the dog.

    It is the loss of the local WI as there are not enough ladies in the village to sustain one.

    It is oscillating strangers who peer into your garden and totally ignore your greeting.

    It is the loss of council tax revenue.

    It is the annoying assumption that second home owners have that they have the perfect right to have two homes; that they are doing the impoverished community a service; that everyone loves them.

    In our very crowded island I find articles in up-market newspapers and magazines that take for granted the right of those with money to have second homes very distressing and it is refreshing that the Guardian has written such an article.

    How many homes would be released if second homes were to go? Would we need to concrete over grade 1 agricultural land in East Devon?

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  2. Yes second homes- and third and fourth homes are a very cruel injustice. So many people would like just one modest home, but there is little chance of that happening. As the writer states so many people in public life are owners of multiple homes. We shall never see anything done about the issue while MPs ignore the problem because it suits their pockets to ignore the problem.

    If you are rich enough to own second and third homes then you are rich enough to pay extra taxes. The more homes the more taxes!
    When people own a multiple number of homes then there are always houses standing empty, you can live in only one at a time. They could provide homes for those who really need them.

    If some people want second homes, that’s fine but they should be prepared to pay some form of subsidy to do so.

    The rules need to change regarding the whole issue of second homes – holiday home; holiday lets, there are so many loopholes that exist that need examining.
    So without doubt it is time to do something to change this unequal situation which renders so many people homeless and living miserable lives.

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