Second homes have become a political hot potato in recent years in some parts of the UK and, most recently, also within Wales where I work.
And just as the existence of second homes has pros and cons, so does regulation of the issue.
Is it not the right of the homeowner to make their own choice on how they use their property? Can you tell someone they cannot buy a property unless they use it for certain reasons?
Some people think so and both legislation and other fixes such as the use of planning laws to determine the levels of holiday homes in certain areas have followed.
But would the seller need to secure planning permission or the buyer?
Without intervention, certain areas of the country which are hot spots for buying second homes have the potential to become unbalanced, leading to off-season ‘ghost towns’.
Some politicians also argue that locals are being priced out of the market.
But a recent review on the issue concluded that there is little evidence besides anecdotal stories to suggest that second home ownership is having an impact on house prices, or that it has any more of an influence than other factors.
Nevertheless, the 2020 Annual Survey of Hours and Earnings report found the gross weekly earnings for those living in Wales was the third lowest amongst the 12 UK Countries and Counties surveyed.
So it’s not rocket science that buyers from outside of the local economy certainly come with a financial advantage.
To combat that advantage there is a 4% LTT surcharge on the purchase of Welsh second homes, and since April 2017, our local authorities have been granted powers to charge a premium of up to 100% of the standard rate of council tax on long-term empty homes and second homes.
But is the money utilised effectively?
For instance, to help with supply, the revenue generated from the surcharge could be earmarked by councils for local, affordable housing making more provisions for those affected.
Using the money gained to build more of the right tenure to meet local needs as well as bringing back empty, abandoned units.
In the short term, the failure to bring long-term empty homes back into use and build on brownfield sites needs to be looked at by policy makers at all levels.
The costs involved in developing brownfield sites are often high, meaning they can be less attractive to developers. Funding should be available to cover the cost of remediation, unlocking brownfield land in areas of high housing need, and those who aren’t driven by profit should take ownership of them.
Organisations like councils and housing associations could purchase empty units to be used and kept as affordable dwellings.
In the longer term, do we need to think about how the taxation system can be reformed to better capture land values and promote the optimum use of land so that some – if not all – of these market failures can be fixed?