With households struggling to get onto the housing ladder, the issue of second home ownership, whether that be in the garden squares of central London or along the attractive British coastline, has rarely been more emotive.
Arguments that second home ownership makes housing unaffordable to local residents and deprives communities of social vibrancy have come to the fore.
Not only have council tax discounts for second homes come under scrutiny, but questions have been raised by local authorities and lobbyists such as the Campaign to Protect Rural England (CPRE) as to whether second home ownership should be regulated through the planning system or be the subject of additional taxes.
Policy context
In an age of austerity and at a time when home ownership among the under 35s has fallen by one third in 10 years, it is difficult to argue that second homes, considered by most to be a luxury, should be treated any differently to main homes for council tax purposes. Neither is it easy to argue that non doms, who reside in London for part of the year, should be able to take advantage of stamp duty loopholes.
While measures in these two areas have been taken, proposals for further regulation and taxation of this market need to have regard to the extent and distribution of second home ownership and its wider impacts both positive and negative.
National numbers
Council Tax records indicate there are some 255,000 second homes in the UK, just 1.1% of the UK housing stock. In the context of Britain’s housing need it is a small figure, broadly equivalent to the number of houses which need to be built in Britain each year to meet growing housing demand. However, it is the local concentration of second homes and the consequential impact which this has on house prices that generates so much debate.
Local concentrations
Second home ownership is generally high in Central London and in the most attractive rural locations.
In Kensington and Chelsea around one in every 12 dwellings are second homes. There is a temptation to think that this is purely down to very wealthy overseas buyers who have parked their money in London’s most expensive districts. In reality 11% of band G and H properties in the Royal Borough of Kensington and Chelsea (RBKC) are second homes. One half of second homes are in lower council tax bands. These are often used as a weekday base for those working in London’s tertiary employment sectors. Nowhere is this more evident than in the City of London where 25% of the 6,000 or so dwellings are second homes.
Second home ownership also exceeds 7% of the housing stock in the likes of the South Hams, North Norfolk, Purbeck and South Lakeland. Evidence from Cornwall gives perhaps the most useful insight into the impact of home ownership in these essentially rural areas.