07 Jul 2022

Holiday lets are houses not homes; they are zombie houses that are hollowing out our communities

We all know there is a housing crisis. But, in rural and coastal towns in the south west, things have suddenly become a whole lot worse.

Everybody knows that the owner-occupied market is broken, with house prices in Cornwall and Devon averaging over 10x annual incomes. But, there is now a sharply increasing crisis in the private rental market.

This isn’t just about the ‘London-on-Sea’ hotspots like Padstow and Salcombe. I looked on RightMove this morning for three-bed private rented homes in Ilfracombe in North Devon; there weren’t any. I widened my search by 5 miles; still none. Finally, a 30-minute drive away, I found five homes; the cheapest three were £975 monthly, over 50% more than the Local Housing Allowance (LHA) for the area. The next two were double the LHA. This isn’t about people having to tighten their belts a bit.

And it isn’t about just the usual shortage of available rented homes – in many areas it’s about a complete absence of available rented homes. Check out the Facebook group ‘North Devon & Torridge Housing Crisis’ for people’s individual stories of being given S21 notices and finding that for every available private rented home they are competing with literally hundreds of other people.

The stories are repeated across the region, including the south Devon coastal and market towns where my own organisation, Cornerstone, works. The housing crisis has been worsening for years because our nation isn’t building enough, but it’s the holiday housing market that has pushed things over the edge. Search for three-bed whole-house stays on Airbnb and the map is a rash of holiday lets.

At Cornerstone, like other local housing associations, we always talk about homes rather than houses, and we emphasise how a secure affordable home is what makes everything else like health, family, and community possible.

But here is the key thing; second homes aren’t homes at all. Holiday lets are houses not homes; they are zombie houses that are hollowing out our communities. Proposals to levy double council tax don’t touch many of them; registered as businesses, they don’t pay any council tax at all, and in many cases won’t pay any business rates either. They enjoy huge short-term letting fees, combined with tax reliefs unavailable to the private rented sector.

A study last month from Generation Rent (‘Your holiday our home’) picked up on the huge increase in south west holiday lets (and decline in the private rented sector) from 2020 to 2021. But, it’s worse than that. Statistics are always backward-looking; by the time you have the hard data things have moved on, and the hardest data of all are the personal stories that are happening right now as the holiday letting trend has accelerated further out of any control.

Rural economies need the tourist pound, but they need places for people to live too; keyworkers such as teachers, NHS, and care staff, but also keyworkers such as shop assistants, electricians, hotel staff, and bus drivers.

Is it surprising that so many private landlords have been ending their long-term tenancies and flipping to holiday lets? No; they are behaving rationally in a broken system. Is it wrong for tourists to come to our beautiful area? Of course not; they are behaving rationally in a broken system. We have a broken market and it is hurting people more and more all the time.

Just to repeat myself, this isn’t about creating opportunities for owner-occupation. At current 10x multiplies of incomes for mortgages, most ordinary working people in rural areas are a long way away from buying an open-market homes. It’s about levelling-up the opportunity to find a decent, affordable, rented home – private, housing association, or council - in the community where your family live and your children go to school.

Years of under-investment, coupled with the historic effect of right-to-buy, mean there isn’t enough affordable rented housing in rural and coastal areas, and the private rented market is no longer taking up the slack.

For years we have lived with the fact that in rural areas wages are low and costs are high (and not just housing costs; transport, fuel, and energy as well). Post-pandemic, our ability to cope with ‘new normals’ mustn’t be allowed to inoculate us against recognising this rapidly changing crisis. We need to be intolerant of inequality, and impatient for change, and we need to act now.

Short-term, we need urgent changes:

  • to the planning system to limit and license change of use from much-needed homes to commercial holiday lets
  • to Local Housing Allowances, to increase them to reflect the actual market prices that local people are faced with

Long-term, we need a planning framework and national housing strategy that helps us build the increased number of new homes we need; homes of all tenures and in particular affordable rented homes that are within the reach of local people.

Until we are willing to talk seriously about intervening in these broken local markets, the crisis is getting worse with every summer.

Written by Tom Woodman

Tom Woodman, chief executive at Cornerstone Housing Limited, has written this guest blog for Rural Housing Week 2022.