Landlord taxes have not boosted local housing markets in key areas
Council tax premiums on second homes introduced in April 2025 have not significantly increased housing market activity in Devon and Cornwall, despite encouraging some owners to sell. Transaction volumes remain subdued compared to the wider English market.
New data from LandSale analysing residential property transactions across England, with a focus on the South West region and specifically Devon and Cornwall, reveals that council tax premiums on second homes have failed to invigorate local housing markets as intended. The policy, which allows local authorities to charge up to 100% extra council tax on second homes, aimed to reduce the appeal of holiday lets and increase housing availability for local residents.
The research shows that while there has been an increase in the number of holiday let properties coming to market, this has not translated into stronger sales activity in these areas. Between 2024 and 2025, England’s residential transaction volumes rose by 4.4%, but Cornwall and Devon only saw growth of 3.7% and 1.5% respectively, indicating these markets remain relatively subdued.
Analysis of holiday let market and council tax premium impact
LandSale’s analysis highlights that England currently has an estimated 10,334 properties listed for sale that are suitable as holiday lets, with over half (51.2%) located in the South West. This confirms the South West’s dominant position as England’s largest holiday let market, driven mainly by Cornwall and Devon, two of the UK’s top tourist destinations.
The rapid expansion of second homes and holiday lets in these regions has been controversial. Local communities have expressed concerns that the growth has reduced housing availability for permanent residents, inflated property prices, and led to many homes being empty for much of the year. In response, the government empowered local authorities from April 2025 to impose council tax premiums of up to 100% on second homes to discourage this trend.
According to LandSale, while the higher council tax charges have encouraged some holiday let owners to sell properties, the increase in supply alone has not been enough to stimulate stronger market demand or transaction volumes. The data suggests that despite more properties being listed, the overall market activity in Devon and Cornwall remains below the national average.
Context of policy aims and market realities
The council tax premium policy was designed to reduce the financial attractiveness of owning second homes and holiday lets, encouraging owners to either rent properties long-term or sell them, thereby increasing housing availability for local buyers. The expectation was that this would help ease housing pressures in popular tourist areas.
However, the data indicates that the policy’s impact has been limited so far. The modest increase in sales activity in these regions compared with the wider English market suggests that other factors, such as buyer demand, affordability, and economic conditions, continue to constrain market performance.
For landlords and letting agents operating in these areas, this means that while some owners may be motivated to sell due to higher running costs, the market is not yet benefiting from a significant boost in transactions or buyer interest. This could affect pricing strategies, investment decisions, and portfolio management.
Practical implications for landlords and letting agents
Landlords with holiday lets or second homes in the South West should be aware that council tax premiums may increase holding costs, potentially influencing decisions about whether to continue letting properties as holiday lets or to sell. Letting agents may see an increase in properties coming to market but should not expect a rapid rise in buyer demand or sales volumes in Devon and Cornwall.
It is advisable for landlords to review their portfolios and consider the financial impact of council tax premiums alongside other regulatory and market factors. For agents, understanding local market dynamics and buyer sentiment remains crucial when advising clients on pricing and marketing strategies.
Moreover, landlords should keep abreast of any further local authority measures or government policies aimed at managing second home ownership and holiday lets, as these could further affect market conditions and compliance requirements.
Uncertainties and what to watch next
The longer-term effects of council tax premiums on second homes remain uncertain. While initial data shows limited market stimulation, changing economic conditions, shifts in buyer demand, or further regulatory changes could alter the outlook. Monitoring transaction volumes and pricing trends over the coming years will be important to assess whether the policy achieves its intended goals.
Additionally, local authorities may adjust premium rates or introduce complementary measures, which could impact landlords’ costs and market behaviour. The balance between discouraging second home ownership and supporting vibrant local communities will continue to be a policy challenge.
Considerations for landlords moving forward
- Review the impact of council tax premiums on your property portfolio, particularly if you own holiday lets or second homes in the South West.
- Stay informed about local authority policies and potential changes to council tax premiums or other regulations affecting second homes.
- Evaluate whether continuing to operate properties as holiday lets remains financially viable given increased running costs.
- Consult with letting agents to understand current buyer demand and market conditions in your area.
- Maintain thorough records of property status and tax liabilities to ensure compliance and support decision-making.
Supporting landlords with compliance and portfolio management
The Landlord Association (TLA) offers members access to practical compliance resources and tools to help manage the impact of regulatory changes such as council tax premiums on second homes. TLA’s new property management and compliance platform, ORBIT, currently in BETA testing, is designed to assist landlords and letting agents in organising property portfolios, managing rental documents, and recording key actions related to property management and compliance.
Through TLA membership, landlords can access up-to-date guidance on local licensing, taxation, and tenancy regulations, helping them to prepare for and respond to evolving market and policy conditions. ORBIT’s features under development include document retention, compliance record keeping, and an AI assistant to support property management tasks, which can be particularly useful as landlords navigate the complexities of holding second homes or holiday lets.
Exploring TLA membership and ORBIT BETA access can provide landlords with the support needed to stay organised and compliant amid ongoing changes affecting the private rented sector.
Looking ahead, landlords and agents should monitor how local market dynamics evolve as council tax premiums and other policies continue to influence the supply and demand balance in popular holiday let regions.
Sources: Landlord Today
TLA - The Landlord Association