Life is set to get much tougher for second homeowners following announcements in the recent Queen’s Speech.
Landlords too face major new regulatory changes which come on top of increased burdens on buy-to-let in recent years.
It means investors in both sectors will need to reconfigure their calculations and work out whether both the finances add up and it is still worth the compliance burden.
Too often, the proliferation of second homes sees locals priced out of their home towns and villages, resulting in a depleted workforce and a lack of community.
To deter this trend, under the Government’s new Levelling Up and Regeneration Bill, councils will be given the power to double council tax on unused second homes.
There are some 253,000 such properties in England.
The Government has said this extra funding could be used to help ensure council tax is kept low for local residents.
Resentments in many of our most scenic areas have long been building, stoked most recently by the staycation boom driven by the Covid pandemic.
This Is Money commented: “This prompted renewed interest in the holiday-let market, as second-home owners sought to cash in.”
Now, the cost of living crisis has concentrated minds.
Spelling out the crisis, the website went on: “A report by the countryside charity CPRE found there had been an almost 1,000 per cent increase in properties being used as short-term holiday lets.
“In Cornwall the average salary is £31,471, according to data from the Office for National Statistics. But figures from Rightmove show that the average price of a property in St Ives has reached £429,188 — just under 14 times local incomes. It is a similar story in Coniston, in the Lake District. House prices stand at an average £608,222, having risen by 62 per cent in the past decade. But average annual workplace earnings across South Lakeland were £26,193 in the year to September 2021.”
Not only have locals been priced out of buying but they struggle to rent, too.
Tim Farron, MP for Westmorland and Lonsdale, told This Is Money that the private rental market in his corner of the Lake District has been ruined by rich landlords snapping up properties for holiday lets.
He stated: “It means that private tenants with good incomes are being evicted because landlords can make better money letting properties as Airbnbs.”
Meanwhile, according to the Government, the Renters Reform Bill will improve conditions and rights for millions in private and socially rented properties.
It will extend the Decent Homes Standard to the sector for the first time, giving all renters the legal right to a safe and warm home, and it will ban Section 21 ‘no fault’ evictions “that allow rogue landlords to terminate tenancies without giving any reason”.
It is claimed that 22 per cent of those who moved in the past year did not end their tenancy by choice.
On the flip side, the Bill will also strengthen landlords’ grounds for repossession, making it easier for them to evict tenants who are wilfully not paying rent, or who are repeatedly engaging in anti-social behaviour, bringing down neighbourhoods.
A new Private Renters’ Ombudsman will be created to enable disputes between private renters and landlords “to be settled quickly, at low cost, and without going to court”.
The ombudsman, said the Government, would cover all private landlords letting properties and “make sure that when residents make a complaint, landlords take action to put things right”.
There are 4.4 million households in the private rented sector.
For second homeowners and landlords alike extra regulation inevitably means extra cost – you have been warned!