I don’t know if it’s because I read too much Nation.Cymru or watch too much SeneddTV (someone’s got to) but it seems that second homes are high on the agenda in Welsh political discourse at the moment, writes Calum Davies. Indeed, Plaid Cymru are hosting an opposition day debate about it today after asking several questions about them in the Senedd following its summer recess last week.
‘Second homes’ mean different things to different people. Are second homes someone’s other property – in which they live for only part of the year, and pay council tax and Land Transaction Tax (LTT) premiums – or are they places mostly let out to tourists in the form of holiday lets? The discourse is poor at identifying which is being discussed. There needs to be an explicit distinction between the two. For the record, I own neither kind.
The first argument in favour of second homes is how it increases the tax yield. On a local level, several Welsh councils are sticking council tax premiums on second homes. Although I disagree with this principle of punitive taxation, their presence should make second homes an attractive prospect to a degree because the owner contributes more than full-time residents while also being there less, thus being less of a burden on local services. So not only is the council getting extra money from that person, they’re paying out less to them too. The premium can be utilised as a deterrent, but I suspect that council finance departments love it when a second home is snapped up because of this.
There is also the LTT premium. If you buy a second home in Wales, you’ll pay a 3-15% premium on it. That’s a nice bit of money for the Welsh Government. LTT is one of the unfairest levies out there in the first place, but those wanting to restrict second homes should make clear the financial implications of reducing the volume of second home purchases.
Given one of the arguments used by anti-second home campaigners is how they prevent locals buying in the area, those like Plaid Cymru should consider removing the LTT premium for Buy-to-Let properties (here, I will declare a professional interest). Given not everyone in the Llŷn Peninsula will be able to afford to buy, then maybe providing rental accommodation in the area before they can is the best way to prevent people, especially the younger generation, leaving the locality. This can be instrumental to ending the “brain drain” to the cities. If the economic consequences of coronavirus will be like that of the 2008 crash, then the private rented sector will become increasingly relied upon. Therefore, landlords should be empowered to, not discouraged from, purchasing housing for locals to rent. And if you’re still concerned about the lack of social housing, use those council tax and LTT premiums to fund their construction.
To be fair, the tax issue is somewhere recent commentators have had a point. There is a problem with some second homeowners registering that home as a business rather than a residence and, thus, subject to a more generous tax regime. However, that means the problem is not with second properties but tax efficiency (or avoidance depending on your outlook). I sympathise with the need to toughen up the rules around this but rather than discourage second homes, this should be an opportunity to encourage tourism to these beautiful areas rather than drive people away. After all, tourism will account for a substantial part of the economies of Wales’ beauty spots. Drive up demand and those owners will be more willing to let out their property for longer, justifying their previously dubious business status.
I’ll quickly add that the reason locals cannot buy local is not simply because others from outside the area are buying stock, but because wages are too low. North-west Wales has high amounts of second homes but some of the lowest incomes. Improve and diversify the economy there and then outsiders can stop being scapegoated. Not only that, but if you make the area in which someone’s second home more prosperous, it may very well become their primary residence. This essentially puts an end to all the gripes of the anti-second home brigade. Or does it?
Now, I am sure Plaid Cymru are pursuing this path for a sincere reason given their base is populated yn y Fro Gymraeg where these second homes will be found. However, second homes are not a huge issue beyond there (aside from not-Plaid-friendly Pembrokeshire) so I cannot see where the electoral advantage is other than in defending these pretty safe seats.
What is rather galling, however, is the hypocrisy. The nationalist movement seem to be heavily pro-immigration – just look at election debates, Brexit campaigns, and parliamentary speeches – but not if it means going to their heartlands. It smacks of nationalistic NIMBYism and virtue signalling. This is usually manifested in the need to ‘preserve communities’ and ‘protect areas where the Welsh language thrives’. One recent piece I read said ‘there would be increased settlement, primarily but not exclusively from England, and more holiday homes, further diluting our ‘Welshness”.
This insular mindset essentially translates to ‘migration from anywhere can spoil it for the rest of us’. But am I less Welsh if there are non-Welsh people in my village? If I move to England, is my ‘Welshness’ diluted? This is nothing less than othering of the English. Imagine the furore kicked off by the media and the Left if the Conservative Party were to use such coded language about foreigners? All the dogs in Wales can hear that whistle blowing loud and clear.
However, my main defence of second homes is simply this: if I want to buy a house in Conwy, Gwynedd, or Ceredigion, I shouldn’t be punished, othered, or demonised just because I also own one in Cardiff, London, or Glasgow. I am a British citizen and free to buy a property in this country. And so are you. The state should not seek to stop you for that reason alone.
I would encourage those who want to restrict second homes not to keep carping on about how important housing is and get annoyed when people actually buy it. If they want to end the supply and distributional housing crises then ask for a mandate to pay for more social housing, liberalised planning laws to build faster, and incentivise (but not force) small households to downsize to free up larger stock. You need to improve the economies and housing stock quality in post-industrial and rural areas to make a dent in the demand and quality housing crises. That’s all before the problems in extending credit to first time buyers who are also faced with needing to raise substantial deposits.
Punitive taxation and arbitrary restrictions on ownership is not the answer. They do nothing but harm our liberties with negligible benefits in return. Everyone should be free to buy a home, even if that’s more than one.
Calum Davies is Deputy Chairman of Cardiff Central Conservatives.