Thank you to everyone who has contacted me about the rise in holiday lettings and the impact on local housing supply.
The number of second homes has risen by a third since 2010. Holiday homes trading as businesses have increased by more than 20% since the pandemic alone, as restrictions on foreign travel has resulted in a surge in demand for domestic holidays.
While short-term holiday lettings can bring benefits to local economies, the so-called ‘Airbnb effect’ on housing markets is a significant cause for concern, particularly for local housing stock, prices and communities.
The private rental sector is similarity affected. A report by Capital Economics found that 2.7% of the UK landlord population have already made the switch from long-term rental properties to short-term lets, equating to 50,000 homes made unavailable to long-term tenants. A further 10% of landlords said they are considering moving their private rented properties to the short-term market.
While the Government reduced tax relief on mortgage interest for landlords to “level the playing field” for first time buyers, this did not apply to second homes designated as holiday lettings. In my view, its decision to extend the Stamp Duty tax holiday to landlords and second homeowners also represents a giveaway to the buy-to-let and holiday homes market. It reduces the overall supply of homes and does nothing to address the housing emergency.
I recognise your calls for the Government to withdraw mortgage tax relief from people with holiday lets to encourage property owners to make homes available for local people. However, the Chancellor outlined no such changes at the recent Autumn Budget and Spending Review.
Most second homes designated as holiday homes also benefit from Small Business Rate Relief. In 2018, the Government consulted on options to strengthen the criteria for holiday lets to be liable for business rates. Yet more than three years later Ministers have still not set out any plans for reform.
The pandemic has brought into sharp focus the scale of housing inequality. But the problems of undersupply and affordability predate COVID-19.
I believe there is an urgent need to fix our housing emergency by maximising delivery of all tenures. We need bold action to redefine housing as a human right instead of a commodity to be traded and profited from. We need to stop seeing housing as an investment opportunity, and recognise our homes are the bedrock of a stable, successful life, starting by preventing overseas investors buying up whole swathes of developments off-plan, and instead giving first time buyers and local people first dibs on new build homes.