This week I had every intention of writing a simple article, comparing house prices in Hayle, Penzance and St Ives. But then my brain got hijacked yet again by West Cornwall’s housing crisis.
The world’s press shines a spotlight on West Cornwall
I, like the majority of the locals have loved the spectacle that the G7 has brought us. My son goes to St Ives School and the drive in has never been so exciting. The area has been a hive of activity for weeks, as West Cornwall prepared itself for the arrival of 10 of the major world leaders.
I hoped this stunning location would sprinkle a little bit of its fairy dust over these decision makers and it would help to bring about changes in the way the world tackles climate change and poverty.
I was even prepared to overlook the irony of the rather large motorcades and the air miles travelled by these leaders, if these meetings deliver real change.
But, I had a nagging feeling that with the area suddenly being thrust into the spotlight of the world stage, this might fuel the already overheated local property market.
Rightmove searches for Carbis Bay increased by 103%
Then on Friday I read in one of our regular trade bulletins:
The number of people searching for property in Carbis Bay has more than doubled in a day, as home-hunters check out the area currently on the global stage, according to Rightmove.
Buyer searches for Carbis Bay were up 103% on Wednesday 9th June compared with the previous day.
Cornwall was actually the most searched for place on the property portal last month, as coastal destinations grow in popularity ahead of the summer period.
Rightmove’s spokesperson Tim Bannister said: “All eyes are on Carbis Bay right now, and with supply so limited, coupled with the price premium for the county and the fast pace of sales, it’s only a lucky few who will be able to move there, but thousands of others are checking out what’s on offer
Whilst not surprising, this is worrying none the less. Our database of people looking for properties isn’t going down. I also know from speaking with estate agents in the area, that there’s still a huge shortage of properties that are coming on the market. This means that any new listings often go for more than the asking price.
Early in the G7 weekend Mr Johnson stated that £65m was going to Penzance, St Ives and Camborne for local projects. This ‘New Investment’ will be going towards footpaths, cycle paths, theatres, sports clubs and historic buildings.
Whilst this is a lovely gesture, it won’t help the local people who have nowhere to live. What a difference it would make to so many more locals families if the £65m was used for a social housing initiative in the area!
Cornwall Council Missing the point
On top of all this, Cornwall Council sent out a survey for locals titled ‘Lets Talk Homes’. They go on to explain that they are starting to review their housing strategy for Cornwall and would like locals to have their say. ‘Fantastic’ I thought. Then I read the rather bizarre questions that appear to have no comprehension of the Cornish housing crisis.
I appreciate that this is the start of their planning process but until the core problems in the local housing market are addressed, all their ‘blue sky’ ideas, meetings and strategies will be a complete waste of time and money. Here’s the link to their questionnaire. I urge as many locals as possible to complete it with factual, real life problems and what we really need them to focus on.
A very wise boss of mine once said ‘I don’t want you to come to me with problems, come to me with solutions to the problem’.
For what its worth, here are what I believe are the problems in the West Cornwall Housing market and my solutions to them?
Problem 1 – Not enough council/social housing
There are and always will be people in our community who for a variety of reasons will never be able to buy their own home. They are the long-term renters and are often some of the most vulnerable in society. They should not be in private rented properties and they should never have to experience the indignity of being made homeless because a landlord wants or needs to sell their home.
Solution: There needs to be a social house building strategy for the whole of Cornwall. This is in my mind is the single biggest issue that must be addressed. Whilst the other solutions I mention below will help, its this strategy that would have the greatest impact.
Cost is a red herring
Yes there would need to be initial funds to build, but housing stock has a value and is a growing asset. They could borrow against these assets and even sell off council homes to tenants in the future if they needed to raise funds. As long as there are safeguards in place, similar to some of the house building initiatives for locals there are around. And importantly as long as the money made is re-invested in more housing and not squandered as was done in the 80’s.
The other benefit of council owned properties is that they would be in control of rental costs and not be so affected by market changes, as we’re seeing now.
Problem 2 – house prices in West Cornwall being over 8x the local average wage
There are a few great initiatives, where houses are built and sold specifically to locals. The prices are capped and there’s caveats to stop them being profited on in the future. These are perfect for people who want to be sure they have a home for life in the area they’ve grown up in or have lived in for many years and have no intention of ever leaving.
There are a lot of working tenants who can afford over £1,000 a month in rent but can’t buy a home. These are the very people who should be able to buy one of these homes but there just aren’t enough to go round.
Solution: These housing initiatives are great and we just need far more of them. They also need to be given priority to build over the large, overpriced house builders.
Problem 3 – Mortgages have become near impossible to secure if you’re self employed
How is it fair to expect a self employed person to have a minimum of 2 years of accounts before they can even apply for a mortgage. Yet an employee can have a job for 3 months and be able to secure a mortgage and then be out of a job in month 4? Most self-employed have savings because they know to cover themselves for lean periods and they often have more than one income stream too.
Solution: Mortgage companies should look at a person’s income, expenditure and savings over a year (self employed and employed). This will give a far better idea as to an individuals risk factor and their true affordability level.
Problem 4 – Too many tax breaks and not enough legislation around the holiday letting market.
I have nothing against hard working holiday let businesses, but I do have a problem with them being disproportionately more tax efficient than a residential let. Especially when you think that residential landlords are putting a roof over peoples’ heads and holiday lets are a luxury. We need both in Cornwall but there should never be holiday lets to the detriment of people having a home.
On top of this its also too easy to buy a holiday home and get all the tax breaks of a holiday let. As an example, they can be exempt from paying business rates, by stating they intend to let their property out for a certain number of days a year. They don’t actually even have to do so, they just need to show they’ve tried!
Solution: Lets even up the legislation across all second homes and make the rules around being entitled to the business rates discount much stricter.
Where will that leave the private rental market?
Have I talked myself and landlords out of a business?!
Not at all. We have too many of the wrong people clogging up the private rentals market. By addressing the issues above, this market is then back to doing what it does best. Private rented properties will once again support the more transient type of renter who needs a property for 1-5 years.
I appreciate all this is easy to say and far harder in practice to implement. But the Cornish Housing Crisis can’t continue to be kicked down the road. It needs addressing now before the county loses all its skilled workforce and becomes one big retirement, or second home destination.
Do you have any solutions that I’ve missed? Please let us know. You’re welcome to comment below, or contact us directly.