The 2017-2018 figures show that 3,190 second or investment properties were bought in the year, equalling 21% of all home purchases in the region.
The figure represents an increase of 20% in second home purchases over the previous year. This is despite the government having introduced a 3% stamp duty surcharge on second homes in 2016, designed mainly to deter buy-to-let property investment and help move more housing stock into the hands of owner-occupiers, and particularly first-time buyers.
The proportion of second homes is particularly high in Ipswich, and in towns along the Suffolk coast. Speaking to the East Anglian Daily Times, Southwold town and district councillor David Beavan expressed his frustration that as few as one in five properties in the seaside town are being purchased as a main residential home, with around four fifths bought as investments or holiday homes. Overall, around 60% of residential properties in Southwold are second homes.
The relative rise in second-home ownership in Southwold and similar towns is of particular concern to some campaigners and politicians, as property owners are using a tax loophole which allows them to register their second homes as self-catering holiday lets and claim small business rate relief. This is reportedly costing Southwold council up to half a million pounds a year in potential council tax income. The controversial issue is the subject of an online petition to parliament, which is open for signatures until 11 November.
Under the loophole, any second home that is “available to let” for 140 days a year, and which has a rateable value of less than £12,000 as determined by the Valuation Office Agency, can qualify for small business rate relief of 100% – meaning no tax is paid on the property. Note that the property need only be available for let, and not actually let out.
Earlier this year, Liberal Democrat peer Lord Shipley raised the matter in the House of Lords on behalf of local campaigners, and called for the system to be brought in line with that in Wales, where second properties must both be available to let for 140 days, and actually let for a minimum of 70 days, in order to qualify for business designation and exemption from council tax payments. The proposal won the backing of several peers, but failed to subsequently garner widespread support in the House of Commons.
Alternative proposals have also been suggested, including a separate call from the Liberal Democrats for self-catering lets to be brought in line with furnished holiday lets, which must be available to let for 210 days a year, and let for at least 105 days.
While parliamentary discussion around second homes has centred on activism by David Beavan and other campaigners from Southwold, it is far from the only place in the country where the high number of second homes is having an impact on local communities. In a referendum last year, the residents of the Cornwall seaside town of St Ives voted for a ban on building new properties designed as second homes, while other parishes in Cornwall and elsewhere have followed suit. It remains to be seen whether towns in Suffolk will take a similar approach.