Second Homes and Holiday Lets: Rural Communities

Kevin Hollinrake Excerpts

Thursday 6th January 2022 Westminster Hall

[Tim Farron (Westmorland and Lonsdale) (LD)]

I beg to move,

That this House has considered the matter of second homes and holiday lets in rural communities.

It is a huge pleasure to serve under your chairmanship, Mr Sharma. Happy new year to you, too, and to colleagues.

It is a huge privilege to serve our communities in Cumbria—our towns, villages lakes and dales, among the rugged beauty of England’s finest landscapes—yet the people who live in our communities are even more precious than the places themselves. We welcome those who see Cumbria as a holiday destination: a place for leisure and relaxation, and a place of peaceful serenity and exhilarating extremes. It is our collective privilege to be the stewards of such a spectacular environment for the country, yet our full-time local communities face an existential threat unlike any other in the UK. I am immensely grateful to have secured this debate, because the housing crisis that has faced our communities in Cumbria and elsewhere in rural Britain for decades has rapidly become a catastrophe during the two years of the pandemic.

For the last few decades, we have seen an erosion in the number of properties in Cumbria that are available and affordable for local people to buy or rent. What little I know of geology tells me that although erosion usually takes place over huge passages of time, sometimes a whole rockface may collapse or a whole piece of a cliff might drop into the sea in a single instant. That is what has happened to our housing stock during the pandemic. In the space of less than two years, a bad situation has become utterly disastrous.

I have been calling for the Government to take action from the very beginning, so I confess to being frustrated and angry that Ministers have yet to do anything meaningful to tackle the problem. As a result, many of us living in rural communities feel ignored, abandoned and taken for granted by the Government, and we stand together today as rural communities to declare that we will not be taken for granted one moment longer.

In South Lakeland, the average house price is 11 times greater than the average household income. Families on low or middle incomes, and even those on reasonably good incomes, are completely excluded from the possibility of buying a home. Although the local council in South Lakeland has enabled the building of more than 1,000 new social rented properties, there are still more than 3,000 families languishing on the housing waiting list. Even before the pandemic, at least one in seven houses in my constituency was a second home—a bolthole or an investment for people whose main home is somewhere else.

In many towns and villages, such as Coniston, Hawkshead, Dent, Chapel Stile and Grasmere, the majority of properties are now empty for most of the year. Across the Yorkshire Dales, much of which is in Cumbria and in my constituency, more than a quarter of the housing stock in the national park is not lived in. In Elterwater in Langdale, 85% of the properties are second homes. Without a large enough permanent population, villages just die. The school loses numbers and then closes. The bus service loses passengers, so it gets cut. The pub loses its trade, the post office loses customers and the church loses its congregation, so they close too. Those who are left behind are isolated and often impoverished in communities whose life has effectively come to an end.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate the hon. Gentleman on having secured this important debate. He has mentioned that his local authority has brought forward some affordable housing—I cannot remember the number he said—but that it was all rented. The Government have created a new scheme, the first homes scheme, to allow discounted properties to be purchased as affordable homes. Is the hon. Gentleman pursuing that with his local authority, to try to make more of those properties available to his local first-time buyers?

[Tim Farron]

I am grateful for the hon. Gentleman’s intervention. The short answer is yes. The slightly longer answer is that the first homes scheme cannot be instead of other schemes but has to be in addition to them. By the way, in a community like ours where the average household price is 11 times greater than the average income, the first homes scheme will not help people; it will not even nearly help them. Maybe if their income was seven times less than the average house price, it might just help them, so it is a good scheme, but it is barely even the tip of the iceberg. Yes, I have spoken to the previous Secretary of State to ask him to make our area a pilot, but that does not touch the sides, if I am honest. Nevertheless, the hon. Gentleman has raised a really important point.

During the pandemic, I have spoken to many local estate agents across our county. Around 80% of all house sales during the past two years have been in the second home market. Those who have the money to do so are rethinking their priorities, investing in the rising value of property and seeking a piece of the countryside to call their own, and we can kind of understand that. I do not wish to demonise anybody with a second home, or to say that there are no circumstances in which it is okay to have one, but let me be blunt: surely, someone’s right to have a second home must not trump a struggling family’s right to have any home, yet in reality, apparently it does. Every day that the Government fail to act is another day that they are backing those who are lucky enough to have multiple homes against those who cannot find any home in the lakes, the dales or any other rural community in our country.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to serve under your chairmanship, Mr Sharma, and I thank the hon. Member for Westmorland and Lonsdale (Tim Farron) for having secured this important debate. It was good to hear him speak in favour of free markets: that is not something we always hear from his party, so it was very welcome. However, I agree with him that we are in a broken market. I must draw the House’s attention to my entry in the Register of Members’ Financial Interests: I have been involved in the housing market for many years.

There is a scarcity of land across the country, and in the rural areas we are talking about today—many of which are covered by national parks, including much of my area—those scarcities are even more profound. The reality is that we are already intervening in the market by creating that scarcity through the planning process, so I do not think it is wrong for us to talk about interventions, because free markets cannot be the only solution to the problems we have in the housing market.

Certainly, second homes are having a very big effect, creating even greater pressures and affordability constraints in some of these rural areas, and not just rural areas—as the hon. Member for York Central (Rachael Maskell) said, many urban areas face the same kinds of issues. Ryedale council covers much of my patch, where the average house price is around £300,000, with an average earnings to house price ratio of about 8.7. In Hambleton, the ratio is 7.2, and in other places, such as Filey—attractive coastal resorts—prices are going up, and the increasing number of holiday lets is putting further pressure on local people’s ability to find properties to rent and purchase. We cannot just rely on a supply and demand equation to solve all those problems: we must look at different interventions.

What the Government have done through the first homes scheme is part of the solution to this problem. It is an excellent policy, and I do not quite agree with the hon. Member for Westmorland and Lonsdale that it is not a solution for his constituency. He mentioned that average house prices in his patch were 11 times greater than average incomes—well, first homes could be up to half-price. Transfer values in my area from developers to housing associations are below half-price, and there is no reason why some of those houses cannot be made available to purchase in perpetuity through discounts of half-price or even below half-price.

I urge the Government to rename the whole first homes policy “half-price homes”, because we could deliver many properties around the country to local first-time buyers at half-price. That would make a significant difference to the hon. Gentleman’s constituency and to mine. It would mean that young first-time buyers could buy properties in my constituency that would cost four or five times their average earnings, which would bring those homes in scope for lots of those people. I fully concede that this is not all about affordable homes for purchase—we also need affordable homes to rent, shared ownership and lots of other things—but first homes is a very important policy that we should be driving further forward.

Taxation is bound to come into this conversation. Clearly, the Government believe that already: there is already a 3% stamp duty surcharge for second homes, so the Government believe we need to do something about second homes to try to level the playing field between investors, second home owners, first-time buyers and other buyers in our constituencies. This is not uncharted territory for this Government, so we should have a conversation about whether we should have a council tax surcharge as well. There is a perfectly sensible conversation to be had here, while recognising that the Conservative party believes in freedom of choice, so if somebody wants to use their money to buy a second home in a different part of the country as an investment or a place to live, we should not be totally against that. It is about trying to strike a balance between those two things to make it a fair and level playing field.

Another area that could make a big difference and that could fund lots of different activities would be the way we tax non-resident overseas owners. This could be in rural areas or urban areas. I do not think there is any argument for not taxing those people pretty heavily if they own property in the UK and are non-resident. We already have a 2% surcharge, on top of the 3% surcharge, for overseas owners. These people are having a profound effect on some house prices in urban areas as well as rural areas. I think 28% of properties sold above £2 million are bought by overseas owners. Around 20% of all properties in London—and probably a decent quantity in York and other cities—are owned by overseas residents. I do not see a reason why we would not seek to tax those people even more heavily than with a 100% increase in council tax.

Roughly, if we applied a 1% wealth tax on UK properties —this is only for overseas owners, not UK residents—it would raise £4 billion to £5 billion a year. There would still be an incentive for those people to invest their money in the UK, which I am not against, but the reality is that this would make it a fair and level playing field. They would still benefit from the very high house price growth. As we have heard today, house prices have been rising by around 10%, so it still makes sense for people to invest, but such a tax would mean that we could take a little bit out of the money they are making every year from house price inflation and put it elsewhere.

I would recommend that we put that £4 billion or £5 billion a year into the first homes programme, increasing the number of properties available to local, first-time buyers who are keen to get into the housing market. That would ensure that those local people have a stake in our communities and are available for employers to do the very important work of making our communities sustainable.