House prices plummet in Britain’s most expensive seaside town after tax raids
The property market in the UK's priciest seaside neighbourhood has taken a hit from Labour's new levies on second homes and short-term lets.
A seaside neighbourhood in Dorset known as 'Britain's Palm Beach' for its luxury homes and millionaire residents has seen house prices plummet after the Government introduced a raft of new taxes on second homes and holiday lets. Sandbanks, which is home to football manager Harry Redknapp and celebrity chef Rick Stein, among others, saw a dip of 3%, or £33,595, in its property prices last year. Despite retaining its place at the top of the UK's coastal property leagues, the affluent area couldn't escape a market dip that had even more severe repercussions for other lower-ranking seaside spots – with Salcombe in Devon recording a 16% drop in average property value between 2023 and 2024.
It comes after Labour gave local councils the green light to charge a 100% rise in council tax on second homes from April 1. The move is in response to concerns about residents getting on the property ladder. In Chancellor Rachel Reeves' hike of second homes stamp duty in her autumn budget, UK buyers are now contending with a maximum 17% for the most expensive homes. The average price of a house by the sea dipped across the country by 1% last year, now clocking in at £295,991, according to Lloyds Bank's analysis of data from the UK Land Registry.
Sandbanks is popular with tourists for its long sandy beaches, array of upscale restaurants and celeb-spotting opportunities.
Despite the fall in property prices, in some cases by tens of thousands, Amanda Bryden, head of mortgages at Lloyds, said buyers were still keen to put down roots in coastal locations.
"Our latest research shows the most exclusive seaside spots - like Sandbanks - still command premium prices," she said.
"In some of the UK's most desirable coastal towns, average prices have dipped slightly over the past year. But, over the longer term, values remain significantly higher - especially in the south west, where demand from lifestyle movers continues to shape the market."
In spite of the recent dip, property prices by the sea have increased nearly 18% since 2019, the bank said.
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But Nigel Bishop, whose buying agency Recoco Property Search, focuses on securing rural homes for affluent clients, said second home markets in desirable areas were beginning to contract because of the tax reforms.
"The government's numerous tax changes have had a significant impact on the second home markets and has seen some holiday home owners struggle to financially upkeep their home away from home," he told The Times.
Nick Maud, director of research at Savills, added: "With most local authorities choosing to apply double council tax on second homes and an increase in the stamp duty surcharge for such properties, prices of prime coastal homes have seen the most downward pressure on prices."
