Second home boon for some, misery for others
Wealthy individuals who snap up second homes in picturesque seaside towns are being blamed for fuelling the housing crisis.
According to Press reports, local residents in key tourist towns are being priced out by wealthy Londoners and overseas buyers, a trend that became more apparent during the pandemic, when lockdown and flexible working allowed many people to relocate, resulting in record property sales totalling £54.9 billion.
In Cornwall and Devon alone, where the average asking price for a property has risen by almost a quarter in some areas, more than 5,500 properties are registered to owners who are based overseas, recent data shows.
According to the Western Morning News, the price rises have also seen landlords either selling up or switching to short-term lets (a common practice in overseas tourist resorts, including Andalusia in Spain). This has limited the availability of properties and pushed-up rents even further.
Overall, foreign ownership in property in England and Wales has shot up in the last decade to almost 1% of all registered titles, according to research by the Centre for Public Data, showing that three quarters of titles were registered to individuals with addresses mostly in the Middle East, South-East Asia and British Overseas Territories.
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According to reports, the number of overseas owners in Devon has also more than doubled in just over a decade, from around 1,500 in January 2010 to about 3,900 in August 2021. In Cornwall, the figure has risen from 638 to more than 1,700 during the same period.
Data from Rightmove shows that average asking prices for houses in the seaside town of St Austell in Cornwall have jumped by more than 20% in the last 12 months leading up to March.
Entertainer Seamas Carey, who was born and raised in Falmouth, was quoted in a recent Daily Mail article saying he could no longer afford to rent, much less buy a home in the area.
He told the newspaper: “I am only too well aware of the issues going on here right now - the lack of affordable housing and the high demand, which is pushing house prices up and up.”
Since 2016, overseas buyers have reportedly also been snapping up flats as investment opportunities in large inner cities, including Manchester and Leeds.
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The war in Ukraine has also served to highlight the issue, with the BBC this month revealing that sanctioned Russian oligarchs have been linked to £800 million worth of properties in the UK, mostly in the south of England and London.
In addition to the list of sanctioned oligarchs, a total of 22 properties in Cornwall were reportedly registered to people with addresses in the Russian Federation.
Housing shortage crisis
The problem is compounded by soaring house prices and the lack of stock, which has contributed to the affordable housing crisis in traditional low wage areas.
According to various housing experts there is a shortage of between 300,000 and 340,000 new builds a year in the UK.
A report commissioned by the National Housing Federation and Crisis, from Heriot Watt University, suggested that out of that figure 145,000 homes should be made affordable. However, only 216,000 new homes were built in 2020, down from 243,000 in 2019.
According to the latest affordability report from the Office for National Statistics (ONS), house prices grew faster at a local level than earnings in 91% of local authority districts, leading to a reduction in housing affordability in these areas.
Overall, average house prices in England increased by 14% in 2021, while average earnings fell by nearly 1%.
The ONS also estimated that full-time workers in England can typically expect to spend around 9.1 times their annual earnings on purchasing a home - a statistically significant increase compared with 2020, when it was 7.9 times their workplace-based annual earnings.
Last week the housing secretary, Michael Gove, admitted that the government had failed to build enough affordable housing, adding that there was an “urgent” need for action.
He also described the lack of available social housing as “simply inadequate for any notion of social justice or economic efficiency” and railed against the quality of the private rented sector, describing the “fragility and vulnerability that so many people find in their daily lives” as “insupportable and indefensible”.
