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How has the West Cornwall Property Market Changed since 2021?

Posted by Deborah on 19/06/2024
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The BBC were in town today, interviewing a few locals, including myself about the housing market.  I was able to share a couple of thoughts but had so many more bubbling around in my rather overactive brain!  

It got me pondering what, if anything, has changed in the West Cornwall Property Market, since the article I wrote back in 2021: https://camlettings.co.uk/the-housing-crisis-in-west-cornwall/.  So here are my thoughts on the changes.

The effect of the stamp duty holiday on the local housing market

In 2021, my first observation at the time was that the Stamp duty holiday was good on one hand, in that it had given the economy a quick adrenaline shot.  However, I was concerned that a lot of properties appeared to be being snapped up by second home and holiday let owners.  This in turn was fuelling house prices.

I think I called that one right!  This was, in my opinion, a complete disaster of a policy.  Yes, it gave the economy a bit of a sugar rush but we all know what happens after one of those!

It made the already difficult prospect of first-time buyers getting on the ladder, virtually impossible. Prices were driven to eye watering levels and gazumping was rife. A knock-on effect of this feeding frenzy was that very few of these properties that were being purchased as long term rental properties or even as owner occupied homes.   

In fact, a lot of  residential landlords switched their property to the more lucrative and less legislated holiday let market.  It was for a while a licence to print money for these owners.

 Its important to remember that this was off the back of travel restrictions and even when lifted, there was still a fear of catching covid in the close confines of an airplane cabin, so ‘staycations’ became the buzz word.  It felt at the time as if the whole world wanted to move to Cornwall.

The residential rental market ground to a halt, with demand massively outstripping supply. It became a major crisis here in West Cornwall.  I observed at the time that we were getting around 100 enquires in 24/48 hours of a rental property going on the market.

Has the demand for rental properties slowed?

Well yes it has but only if you compare it to the pandemic years.  The demand, especially at the more affordable 1-2 bedroom end of the market, is still incredibly high. 

As an example, I advertised a 1-bedroom flat recently and received around 30 enquiries in a 48 hour period before I turn the advert off.  So this is still double that of the national average of 15.  

Its also interesting to note that both the higher end of the sales market and higher end of the residential rental market both appear to have slowed quite considerably.  Its not unusual now to see residential rental properties at above £2k pcm, sit on the portals for 2-3 months before either being filled, or taken off the market. 

How has the shortage of rental stock affected prices?

Rental prices rose dramatically at the height of the housing crisis and the supply and demand imbalance continues to push prices higher. 

Although my observation is that the local market peaked out last summer and certainly at the higher end, prices have dropped back slightly.  This is probably due to the combination of reduced demand, as less people look to move to West Cornwall from the more affluent cities and the affordability ceiling having been hit for the local market.

At the lower end, prices are being kept in check by affordability and whilst still rising, they’re at a much lower rate than in recent years.

What needs to happen?

This crisis will not pass without a massive building plan for social housing across the country.  These are desperately needed for the tenants that for a whole plethora of reasons will never be in a position to buy. They should still be given the dignity of a home for life. 

But don’t dump that responsibility on private residential landlords.  This has to be government provided, or backed initiatives on a huge scale.  Then private landlords can go back to being landlords for the more transient tenants.  This was always the way before the shortage of social housing stock, pushed otherwise social housing tenants into the private housing market.

And on that theme, the press and pressure groups need to stop beating up landlords.  They are not the bad guys here. The vast, and I mean vast majority of landlords try to do their best to support their tenants and look after their properties.  Yes there are a small number of rogue landlords (as there are also a small number of rogue tenants too) but no amount of legislation will change their behaviour.  All that will happen is that the good landlords will become beaten down, or scared by all the legislation and leave the market. This in turn will cause a worse supply and demand situation, push prices ever higher and hurt the very people we all want to protect.

And the bottom line is that nearly 20% of the UK’s housing stock is private rental properties. So legislation in this sector needs to be approached with caution.  Knee jerk policies might make good headlines but never work in the long run.

What’s changed in the second and holiday home ownership market in the area?

I said back in 2021, that there needed to be higher taxes for second home owners, to help curb the growing number of properties being snapped up as occasional holiday homes to the detrement of locals.  Well this too is happening and its causing quite a number of owners to sell up or, as we’re seeing, move their property to a residential let.

There are also less holidaymakers coming to Cornwall than during and immediately post the pandemic but there are way more FHL properties than there were even just 5 years ago.  The basic maths of this means that each owner is making far less profit than they were a couple of years ago.  The increased legislation, has also added costs and complexity to this particular business  model and its now far less lucrative than it was for most FHL owners a few years ago.  Its also extremely hard work and often quite soul destroying  – holidaymakers are a demanding bunch!

We’ve had a number of previously holiday let owners switch to residential in the past 12 months and I can see that number steadily growing.   So it looks like this market is cooling down, which is a good thing.  That said, Cornwall heavily relies on Tourism, so as with the residential market, a measured approach needs to be taken.  

Further thoughts…

I have another article brewing in my head, where I want to discuss different types of tenants. There cannot be a one size fits all policy and I worry about any government not understanding the complexity of this market.  One, on paper, good decision to protect tenants, can have a ripple effect on other areas of the market and actually make the situation worse, if not carefully managed.

I also have some ideas as to how tenancies could be changed to reflect this diversity too.

But for fear that you’ve started to nod off, I’ll save that for another day!

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