Holiday Lets, Housing Shortages and the Soul of UK Communities

We are all acutely aware of the current debate surrounding the proliferation of holiday lets and their impact on the availability of housing for local residents.

Setting aside the occasional pain of dealing with holiday letting customers there is clearly a lot to be said – financially – for the allure of converting a property into a lucrative holiday rental. This is particularly the case in desirable locations, though the consequences for local communities can be far-reaching. This article considers the complexities of this issue, exploring the negative impacts of holiday lets on the housing market, the potential of Use Class C5 as a mitigating force, and the recent decision by Leeds Building Society to restrict holiday let mortgages.

The Shrinking Landscape of Local Housing

The rise of holiday lets has undoubtedly reduced the number of homes available for local residents to purchase or rent. This is particularly concerning in areas with high tourism appeal, where holiday lets can quickly become a dominant presence. The result is reduced supply for local people and this drives up prices pushing locals out of their communities.

As a resident of North Yorkshire and a former planner from the North York Moors National Park I’m only too aware of this issue and the press coverage generated much of the debate around 12 months ago in Whitby and the surrounding coastal villages.

You can tell when a village is dominated by second homes or short term lets by the dark windows every night. Winter months are quiet and summer months are dominated by tourists.

The impact extends beyond affordability. With fewer permanent residents, local businesses struggle to survive, schools face closure, and the social fabric of communities unravels.

Use Class C5: A Step in the Right Direction?

The introduction of Use Class C5 is reportedly designed to address these concerns by differentiating holiday lets from traditional dwellings. This new classification aims to provide a degree of control over their proliferation. If it remains the case that this will require the use of (the often cumbersome) Article 4 directions it is questionable whether C5 will genuinely do what was intended.

Leeds Building Society Takes a Stand

Reported today, the decision by Leeds Building Society to (temporarily) restrict holiday let mortgages in specific areas sends an interesting and potentially powerful message. This move acknowledges the negative impact of holiday lets on local communities and demonstrates how the financial sector may be able to take a responsible decision in being part of the solution.

This is however a single institution, and its reach is limited. Leeds Building Society provides less than 2% of the market share of UK mortgages. Clearly more widespread adoption by lenders would be necessary to create a significant impact.

The Road Ahead: Balancing Tourism and Community…and a change in attitude?

The issue of holiday lets and their impact on local housing is multifaceted. While acknowledging the economic benefits they bring, we must prioritise the well-being of established communities.

Reading this, have you had your eye on picking up a couple of 2 bed cottages in a local seaside resort? I confess my wife and I have a regular debate on the subject. I hover around the ‘over my dead body’ and ‘you do know what I do for a living..?’ My personal view is I would not buy a house that would otherwise be a suitable first time buyer or rentable home.

Perhaps it is time as property professionals that we start to think about a little more about self-regulation?

Moving forward, a collaborative approach is essential. This requires ongoing dialogue between policymakers, financial institutions, tourism operators, and local communities. Innovative solutions, such as targeted financial incentives for residential development and stricter regulations for holiday lets, should be explored and implemented.

Ultimately, the goal is to create a sustainable model that fosters tourism while safeguarding the character and liveability of our communities. As planners, surveyors and professionals in the property world we have a crucial role to play in shaping this future.

This change in attitude would never be a replacement for new housing, but for every house we don’t take off the local housing market it is one less that needs to be built...

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