Appendix C – Second homes

CORFE CASTLE PARISH COUNCIL DISCUSSION ON SECOND HOMES

1-At its session of setting future agendas for the new Parish Council the Council agreed to have a discussion on second homes. The following raises an issue, which could be seen as controversial, and as a village we should continue to be welcoming to all residents whether permanent or second homeowners.

2-a) The issue of second homes was addressed in the Purbeck Local Plan, which is still waiting for approval. In 2017 the former Purbeck DC published a 71-page report on the issue, which amidst so many other issues did not come to the attention of this Council. The discussion document reviewed practice elsewhere, data on affordability and second homes in Purbeck and the policy options : b) The document noted that the planning system could only deal with new homes. PDC did include a second homes policy in its proposed Plan, which it is now applying to applications for new homes. The policy could be challenged if the Local Plan proposal is not approved.

3- The key data for the second homes issue is as follows. : Purbeck is listed among the highest areas in the UK for unaffordabiliy in terms of house prices in relation to local incomes. The average house price in Corfe Castle is about £500,000 and the average Purbeck wage about £26,000 (19 times income) whereas the national ratio figure is far below this the percentage of second homes in the AONB area is quite varied. On PDC data bout 27.8% of homes in Studland are second homes, Church Knowle 19.7%, Worth Matravers 18.75% and Corfe Castle parish about 12-13%. Swanage has the largest number of seocnd homes-over 1000- but a much smaller percentage of the whole stock.

4-Followitng PDC approval of the Purbeck Local plan Dorset Council is adding conditions to the creation of separate dwellings as follows: ‘The properties shall only be occupied by a person as his or her only or principal home. The occupier shall supply to the Council (within 14 working days of the Council’s request to do so) such information as the Council may reasonably require in order to determine compliance with this condition. Reason: To ensure that the approved properties are not used as second homes, which would harm the sustainability of local communities and would not contribute towards meeting local housing need’.

4b-The Dorset Purbeck policy is already being challenged by developers and the Dorset Echo has reported that appeals (three so far) are being upheld as the Plan has not formally been approved

5-The application of a policy which applies only to new homes is however likely to fail in its intention. If demand for second homes exists and the option of buying a new home is closed off the purchaser will seek to buy an existing property. The price of these could be expected to rise faster than before!

5b-A study of the house sales in St Ives by the London School of Economics said that their policy on stopping second home sales for new homes had led to increases in the price of existing homes.

6- A second homes policy can only work if it applies to all properties in an affected area. This paper discusses the merits of this and possible options.

7-One option is whether legislation should be promoted to give discretionary powers to the local authority to restrict the purchase of second homes once a threshold percentage of second homes in a village/town/parish have been reached. Another option is a surcharge on Council Tax together with the removal of business rate relief for second homes.

8-Why should a restrictive policy on second homes be pursued?

The effect on a community of having a large number of second homes is one of concern to many areas where there is severe housing shortage and where land supply for new homes is restricted. Cornwall has led discussion in this area. In Fowey in Cornwall over a third of houses are ‘second homes” and St Ives has included in its Neighbourhood Plan a policy restricting the sale of new property to those for whom it will be their sole and principal residence. The Policy was challenged in the Courts but the challenge was rejected and it is now policy.

9-The major concerns about a large percentage of second homes are a- If as in the case of Corfe there will be almost no new houses for sale for the foreseeable future every house sold to a second home is one less house occupied by a permanent resident. Little by little the life out of a community can be affected as the owners are not there to register for services such as the doctor, and they do not use local schools shops or public transport on a year round basis. If usage is only for s few weeks a year owners cannot participate fully in the community as volunteers or act as carers/look after neighbours on a regular basis. In some places the empty houses can create a ghost village feel as no one is about. b-It has some effect on increasing house prices as those living in more expensive or higher income areas can outbid local people. c- Local people feel a sense of grievance that homes suitable for families are bought by people who may occupy them rarely and who are already well housed.

The irony for second home purchasers is that if too many follow their example the very qualities they seek in village-lots of activity and services-disappear.

10--In the interests of balance, many second home purchasers do so with the intention-often realised-of moving to the area when they retire and when they do live here permanently they become valued members of the community. In the meantime many invest in their properties and keep them to a high standard providing employment. Some second homeowners will let out their properties to holidaymakers, which does bring income and activity for part of the year.

11-: Position in Corfe Castle/Purbeck

The village remains vibrant because of tourism and it retains good shops. The GP practice is oversubscribed because of its excellence. However the village school remains viable only because of the numbers of pupils who live in other areas. Many organisations report that the lack of volunteers is affecting their activities. Kingston hamlet which has many second homes appears unusually quiet.

12-The longer-term picture is less rosy. There is some local feeling that as houses comes up for sale more are being sold for second homes. There are very few properties in the village available for purchase below £400,000 a level far above local incomes. The village is attractive to purchasers from high property value/high income areas and as no new building for sale is likely in the village property prices are likely to remain high. Buying a property in a sought after location is a very secure investment. A restriction on the pool of potential purchasers by stopping purchases of second homes might reduce the increase in long-term property prices.

13--National Policy a) Up to recently Governments were very relaxed about second homes. MPs are affected, as many have to have a constituency home as well as a London address. There are other professions such as the Clergy and the military where purchasing a home for future occupation is common but in the interim many are let. b) It is still possible for Councils to give discretionary discounts on council tax for second homes. Dorset Council does not give second home discounts. c) The greatest change to discourage second homes has been the 3% stamp duty surcharge by the Government in 2016 on second homes and the HMRC have tighter controls on the definition of a second home to avoid couples designating their main home in two different places. d)-A change on small business rates may however have encouraged “buy to holiday lets”. If a holiday let house is registered as a small business it is exempt from business rates if it is under a certain rateable value. The level of exemption has been increasing, as the Government has wanted to encourage small businesses such as shops and start-ups. Removing holiday homes houses from any local taxation seems to be an unintended consequence, which could be changed.

14- Possible national changes A possible change to legislation could be to give the local authority discretion to apply a second homes policy to part of all of its area as follows:

That where the numbers of second homes including holiday lets in an area (to be defined) exceeds a threshold (say 10,or 15 0r, 20%) of the total properties any new sales of existing and new properties should be permitted only to those who will occupy it as their sole and principal residence. This policy should continue until numbers fall below the threshold.

15--The policy would have implications for existing residents as they could not sell to the highest bidder if that person was a second home purchaser and the seller may not realise as much money as they hoped. This could generate some hard cases e.g. people selling to raise money for care fees. .

16-Discussion is needed on whether the restriction should apply to buy to let sales where the tenant will occupy the house all year round.

17-The sort of policy outlined in para14 would require primary legislation and would take some years to reach the statute book. There would need to be a consensus among residents and councils that it is the right way forward. If there is support in Dorset support could be gathered from other affected areas and then from national bodies e.g. the LGA and NALC with a view to lobbying central Government.

18-If a restriction on sales was seen as too radical an alternative discouragement to second home ownership could be a surcharge on Council Tax’ This would recognise that those living full time in a village have to undertake a vast amount of volunteering to make up for Council services which are not being funded e.g. volunteer transport The existing revenue raised could be used for additional services in areas of second homes e.g. rural transport initiatives.

19-It seems wrong in principle that second homes can be registered as small businesses to avoid council tax and to qualify for business rate relief. Such houses should make a contribution to the local area.

20-This paper is for discussion. If a possible policy change were supported it would be discussed first in the Parish and with local Councils and Dorset Councillors.

Steve Clarke 3.11.19