New curbs on second homes will hurt buyers, warns Propertymark

A bid to regulate second home ownership in part of the UK through changes to planning policy will add complexity and extra cost to the buying and selling process, warns Propertymark.

The Welsh Government is considering new planning legislation and policy as part of its ‘three-pronged approach’ to managing second home ownership and short-term holiday lets.

In its response to the consultation, Propertymark says the proposals will require pre-purchase planning applications to change a property’s use into a second home where Permitted Development Rights have been revoked under an Article 4 Direction.

This will slow down the conveyancing process and lead to further delays and costs for sellers and agents, particularly if sales fall through because of increased timeframes. Applications, which will command no fee, will add unnecessary pressure to already stretched council planning departments.

Propertymark says there are other mechanisms available to moderate and manage property use, such as the application of council tax premiums, tightening of non-domestic rates exemptions and introduction of short-term let registration and licensing. 

It also says the focus should remain on delivering a sufficient supply of homes across all tenures.

“Firstly, we do not believe that use of a dwelling as a second home for private use constitutes development. Secondly, there is also just not enough evidence that an additional layer of bureaucracy will have anything other than a negligible impact on issues raised over second home ownership” explains Daryl McIntosh, policy and campaigns manager for Propertymark.

“Purchasers of additional homes are already subject to the higher rate of Land Transaction Tax and councils have powers to charge up to a 100 per cent premium on council tax, but the majority choose not to do so and we need to understand why.

“The Welsh Government has proposed a number of responses in response to a perceived problem without fully understanding it, and it must determine what exactly it is seeking to achieve before any far-reaching changes are made.

“Any additional complexity that is added to the conveyancing process through planning policy is likely to constrain the housing market, and the lost revenue from the higher rate of LTT must be quantified and factored into any policy decisions.

“For second homes that are to be used solely as short-term lets, registration and licensing schemes are likely to be more effective and will provide a local authority with accurate data on the extent of ongoing business activity and enabling them to regulate and manage it.”