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TODAY'S OTHER NEWS

Backfired! Ban on second homes makes it harder for locals to buy

A new study by the London School of Economics suggests that a high profile ban on the sale of new homes to non-locals in a Cornish port has backfired - making property even less affordable to local people.

Back in 2016 a referendum in St Ives ended with a ban on the sale of new-build flats and houses to second home buyers; a legal challenge later in the year failed, prompting a series of other referendum votes with similar results in some other west country locations. 

At the time some estate agents and developers warned of unintentional consequences of the ban, both in St Ives and elsewhere. 

Now there LSE says the St Ives ban, and similar ones in a handful of other resorts in Britain - all applying only two new-build properties - have been damaging to the local construction and tourism industries.

“This has led to an increase in the price of existing homes as summer dwellers are competing for existing homes with local residents” according to Professor Christian Hilber of the LSE.

“Tourist towns can restrict second home investors with possibly positive effects on affordability, but this comes at the cost of a significant adverse effect on the local economy.”

This isn’t the first evidence that the idea has backfired.

Earlier this year The Economist magazine reported: “Developers who bought land when it was pricier can in some cases no longer sell homes at a profit. Others may be holding off from breaking ground in the hope that the policy is scrapped. In 2015 Acorn Property Group, a local firm, was about to buy a site for 34 homes, 14 of them affordable …. But the policy made the scheme unviable because the open-market dwellings could no longer subsidise the affordable ones, the company says.”

In other parts of Cornwall, where there were no such bans, house building had not been similarly affected, prompting the magazine to say: “Second-home buyers in St Ives seem to be shifting their attention to existing buildings, which are not covered by the policy. Data from Hamptons International … suggest that in St Ives second-homers form a larger share of transactions than before the policy came into force. Excluding new-builds, prices have continued to climb. That represents a windfall to locals who already own their homes and may eventually persuade even more of them to cash in and move out.”

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