England’s housing supply lost nearly 11,000 properties to the second home and holiday let sector between 2021 and 2022, according to our new analysis of local tax data.
This continues a trend of homes leaving the residential sector that has accelerated in recent years. It's equivalent in some areas to the loss of more than 2% of the housing stock between 2019 and 2022. This has led to greater competition for vacant homes and inflationary pressure on prices and rents.
Holiday lets face very little regulation, meaning they are a more lucrative option for landlords in tourist hotspots. On Friday, Rachael Maskell MP is introducing a Bill to the Commons that would give local authorities the power to require holiday let operators to obtain a licence in order to let a property to tourists.
- council tax data published by the Department for Levelling-Up, Housing and Communities which includes the number of second homes; and
- data on commercial holiday lets registered for business rates, obtained by a Freedom of Information request to the Valuation Office Agency.
Between 2021 and 2022, the number of second homes in England increased by 3,556, to 256,913. The number of holiday lets increased by 7,153, to 73,624. This is a total of 10,709 homes – equivalent to 29 per day. Those are homes that are lost to people who actually need them.
While we saw a similar increase in holiday lets to the 7,102 as 2020-21 (when pandemic restrictions on international flights led to a boom in domestic tourism), the growth in second homes has accelerated from 807 in that year.
Over 2019-22, the number of holiday lets and second homes has increased by 25,317. The growth in this period has been concentrated in traditional holiday hotspots as well as some urban districts. Leicester saw the biggest loss of primary homes, mostly to second homes, equivalent to 2.2% of the city’s 2020 housing stock. This was followed by Scarborough, South Hams in Devon, the London Borough of Southwark and Copeland in Cumbria, which all saw more than 1% of their housing stock move into the second homes and holiday lets sector in the space of three years.
View the data in full and scroll down to see these numbers mapped.
The effective loss of homes serving as primary residences pushes rents up. At a regional level, the East Midlands lost 2.0 in every 1,000 homes to the holiday sector and the South West lost 1.9 in every 1,000 homes between 2019 and 2022. These regions also saw the highest rent inflation in the same period, of 10%, as measured by the ONS. London had the lowest change in homes classed as second homes and holiday lets (0.1 in every 1,000 homes) and the lowest rent inflation in England, of 3%. (If that seems surprising given the raging rent inflation right now, it's because rents in the capital fell by a lot during 2020-21.)
In recent days, several newspapers have reported that the government is considering requiring holiday lets to have planning permission. A similar policy is already in place in London, where homes let out on a short term basis for more than 90 days in a given year must obtain planning permission. Unfortunately this policy is not well-enforced, with 6,297 of 41,224 whole-property Airbnb listings in London available for more than 90 days.
That said, there is some indication that regulation is worth trying. In inner London boroughs, the proportion of whole-home Airbnb listings that are let for more than 90 days ranges from 12% in Wandsworth to 20% in Westminster (and 28% in the smaller City of London). This is much lower than Bristol and Greater Manchester, the two other English cities whose data is available on Inside Airbnb, where, in the absence of the 90-day limit, the proportion is 40% and 41% respectively.
Rachael Maskell MP is taking a different approach, with councils able to issue temporary licences and cap their number. Her Bill will be debated on Friday.
High nightly rents and the lack of tax and regulation have fuelled an explosion in holiday lets at the expense of people who just need a place to live. In many parts of the country that is forcing people to move away from the places they grew up, and leading to shortages of workers.
The government is beginning to recognise the need to intervene. They have proposed:
- tougher criteria for a holiday let to qualify for business rates and small business rate relief
- powers for councils to charge second home owners up to double the rate of council tax
- introducing a registration scheme for tourist accommodation
However, it is not clear that the rumoured planning changes are the answer given how limited their impact has been in London. The permanent nature of planning permission would also make properties designated as holiday lets disproportionately more valuable than other properties.
Instead, councils should have the power to require holiday lets to have a time-limited licence, and cap their number where there is a severe shortage of homes. This would be a more flexible and responsive approach than using the planning system and would be easier for councils to enforce.
If you want to read our full report on Holiday Lets, published in May, you can read it here.
We also spoke to Rachael Maskell recently about her Bill, which you can listen to here.
You can read the coverage of our research on The Times website here.