Market insight second homes & holiday lets
Market insight reports

Market metrics - second homes & holiday lets

While second home buyers have been making up a progressively smaller proportion of the market, accounting for only 1.3% of sales in the first quarter of this year, those setting up holiday let limited companies have been increasing in number. This suggests that some long-term landlords have switched to the holiday let market to seek bigger profits. However, this has put pressure on the availability of homes for locals in some pockets of the country and is why the government is looking to introduce rules forcing new second homeowners to seek planning permission to let their property on a short-term basis.

Holiday homes - seven key facts on governments new proposals:

  • 1) There were 2,426 LTD companies holding Holiday Lets set up in 2022. A 310% increase on 2016
  • 2) The tax crackdown on buy-to-let has driven landlords into the holiday let market, causing a boom in short-term lets and putting pressure on prices for local residents.
  • 3) Government proposals require new second homeowners in England to seek planning permission for short-term letting, with councils removing some permitted development rights.
  • 4) A mandatory registration scheme and planning use class for short-let properties are under consultation, with grace periods of 30, 60, or 90 nights being considered.
  • 5) These restrictions are only likely to be bought in for a small number of local authorities given that second home purchases are quite concentrated. Half of all second homes bought in the last five years were in just 13 local authorities.
  • 6) Proposals are unlikely to impact property prices across the board. However, in areas with restrictions, lower demand may reduce pressure. That said, a premium may grow for homes with short-let permission.
  • 7) While proposals may halt the growth of holiday lets in some areas, more radical action, such as equalising tax rates, may be required to address affordability and long-term rental issues.
Map showing proportion of second home buyers

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Market Insight Spring 2023

Market Insight Spring 2023
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