The dream of owning a British holiday home, once a sure-fire investment and a chance to escape to the coast or country, seems to be losing its shine. New taxes, soaring interest rates, and a mountain of red tape are making life tough for second home owners, and it’s starting to show.

Holiday Home Sales Plummet

The number of people buying second homes and buy-to-let properties has hit an all-time low. Research from Hamptons estate agents reveals that these purchases now make up less than 1% of all sales, a significant drop from 1.9% in 2019.

This decline is particularly noticeable in popular holiday hotspots. In Gwynedd, North Wales, purchases of second homes have plummeted from 31.9% in 2014 to a mere 9.5% in 2024. Cornwall tells a similar story, with sales dropping from 11% to 5.6% over the same period. North Norfolk, the Isle of Wight, and Pembrokeshire are also seeing significant drops.

Holiday Let Crackdown Bites

The decline is partly due to the government and local councils clamping down on holiday lets. From 2025, owners will lose valuable tax breaks under the “furnished holiday lets” scheme. And to add insult to injury, some face eye-watering council tax hikes of up to 300%.

Gwynedd Council, for example, recently passed a new rule requiring homeowners to get planning permission before turning a property into a holiday let or second home. This move, a first in the UK, aims to tackle the housing crisis but has sparked fears of property devaluation.

Uncertainty Grips The Market

The crackdown is causing anxiety among potential buyers and sellers. Speaking to The Telegraph, Rhys Elvins of Elvins Estate Agents in Gwynedd reports that some buyers are putting their plans on hold until the full impact of the new rules becomes clear. He warns that the new restrictions could deter people from moving to the area, ultimately hurting the local economy.

High-End Buyers Remain Undeterred

While the average buyer is feeling the pinch, wealthy individuals seem unfazed. Estate agents report that affluent buyers from London and the South East are still snapping up high-end holiday homes, particularly in desirable areas of Gwynedd and Pembrokeshire. For these buyers, the additional taxes are seen as an “ouch” but not a dealbreaker.

First-Time Buyers See an Opportunity

As the second home market cools, first-time buyers, particularly in Cornwall, are seizing the opportunity to get a foot on the property ladder. With less competition from second home buyers and investors, more affordable properties are becoming available.

Is The Holiday Let Dream Truly Over?

The recent changes have undoubtedly shaken up the second home market. While the dream is not entirely dead, especially for wealthier buyers, it’s becoming increasingly challenging for ordinary people. The coming years will reveal whether the government’s efforts to curb second home ownership will create a fairer playing field for local residents or ultimately harm the areas they sought to protect.