Have the changes in stamp duty affected the housing market? It seems not where holiday homes are concerned. The number of second home purchases has risen every year since 2011, despite the introduction in April 2016 of the 3 per cent stamp duty surcharge on additional homes.
In the past 12 months figures show that 2.1 per cent of properties sold were to those buying second homes, (that equates to 25,213 homes). It may be that holiday homes as a more “emotional” purchase have not seen the slow down that buy to let purchases have – the value of a holiday home lies in life enhancing time unlike a buy to let which only makes commercial sense if it returns a profit. Purchasing behaviour might be influenced in a more subtle way too - rather than upsizing and paying hefty stamp duty, some buyers are deciding to remain in their main residence, acquire extra space via a compact holiday home and still take less of a stamp duty hit.
Top locations for UK holiday homes
Wales, specifically Gwynnedd and Anglesey, are the current top two places for second homes.
It will be interesting to see if this trend continues as Gwynnedd is introducing an additional 50 per cent charge on council tax to the owners of second homes in April 2018. Councils in other holiday home hotspots, such as St Ives have imposed different restrictions. with some unintended consequences. Last May 80% of St Ives residents voted for tougher rules on second home purchases. Any new builds must be bought and utilised for “full residential use”. The effect has been a slowdown in building, with some developers shelving plans for St Ives and going to neighbouring, as yet unrestricted, districts. The prices of existing properties have also risen – neither of these outcomes is necessarily favourable to full time residents.
Of the total tax revenue of £8.6 billion generated from property transactions in 2016-17, £1.5 billion derived from the additional 3 per cent surcharge. The Government may therefore prove resistant to calls for reform, but at the very least concessions for first time buyers would help those for whom one home seems far from reach, let alone two.
About the author
Emma started her working life at English Heritage’s London HQ, then went to work at a large City law firm where she gained her law degree, she then worked in a number of legal jobs including at a branding consultancy where she specialised in intellec…
View Full Profile