As council tax spikes for empty second homes, co-ownership could be a remedy to the phenomenon of 'ghost' towns. Read how it contributes to the local and hyper-local economies.
Co-Founder & CEO
A few days ago, second home owners were cold-called in the Queen’s Speech of 2022, receiving a loud wake-up call from the UK government — doubling of council tax for their properties if they leave them unused for excessive periods of time. Under this announcement, the Government will give local authorities discretionary powers to impose a premium on vacant second homes, which can go as high as doubling their council tax bill. The rationale behind this move is that it shall discourage owners from leaving properties vacant for a long time, a practice that leads to the sad phenomenon of ‘ghost’ towns and neighborhoods. Meanwhile, this policy will help keep taxes low for local, all-year-round residents, inject money back for the regeneration and development of local economies, and ultimately help ‘level up’ the country.
This bold move, the first of its kind to address the phenomenon of empty second homes, comes to address a problem that only keeps getting worse as time goes by. It is estimated that 253,000 second homes sit unoccupied in England. Many local councils have spoken up repeatedly, with local residents exacerbated at the soaring house prices that they have to face and blaming the government for doing ‘too little, too late’.
We do see the struggle at Flyway. We’ve actually seen this coming, even before there was talk of a centralised, reactionary government policy. Our solution? Bringing co-ownership to the rescue. To put it simply: more owners into fewer second homes.
Even if the lights primarily point to prime, coastal towns in the UK for the time being, the very same problem has been long overlooked in large metropolitan areas like London. This is a big problem that we shall stop turning a blind eye to, and this is exactly what we do at Flyway.
As the night falls in London, whole building blocks and single-family homes/condos in the city's most sought-after areas sit silently empty.
Parts of Knightsbridge, Sloane Square, Chelsea, Notting Hill, Holland Park, Hampstead Heath... Take a bird's eye view, and you will see 'black holes' inside the city; buildings primarily used as second homes by foreigners, who either made the purchase purely for investment reasons or knowingly to them bought a property they did not intend to fill with laughter and life on the first place.
Those ‘absentee owners’, as they are dubbed, visit their second homes for a few weeks every year at best. Some of them even boast security and cleaning personnel that carries out the rather absurd duties (such as constant cleaning and maintenance) for a home that will simply never get ‘lived in.’
When whole residential areas, meaning costly assets, for the most part, sit unused for such long periods, they have a dramatic impact on the local economy. Restaurants, coffee shops, retailers, grocery stores, you name it, feel they operate in a neighborhood that gets less and less dynamic and growing. This psychological effect, topped by the very practical reality of unaffordable housing, turns second home ownership into a phenomenon that merits more attention (and disruption.)
The question is, how can you incentivise someone to stay for extended periods in their second home, leaving behind their primary residence and everything associated with it (job, family, network)? The newly introduced council tax hike might act as a reverse incentive for people to buy brand new second homes, but not so much for existing owners to use these homes more than they intend to. Sure, a government can even ban second home ownership to solve this problem, but this is not a solution for an open society that recognises the enormous benefits of an open global economy and the movement of people and capital under basic rules. But when policy only gives a partially optimal response, turn to the market which might be holding the answer.
This is why, at Flyway, we are committed to helping people and their cities make the best use of these vital assets: their capital and land use. We saw the problem, we strategised around it and we built the solution — co-ownership.
Under Flyway's co-ownership model, second homes rarely stay empty. Our owners rotate throughout the whole year, capturing the total value of ownership at the right cost. Moreover, Flyway second home owners will much more effectively support the hyper-local economies by revitalizing these neighborhoods with a constant flow of business and money.
This is what will make the economic cycle turn, fuel the local economy, and have significant long-term effects on the city. Having homes fully utilised by owners is one of the best things you can do, especially because in the case of co-ownership, buyers feel this place is their own, they feel they belong. They are not passersby or cold investors; they are owners of a second home they have picked because they love the place, they need it for a certain period, and it makes financial sense to them. And most importantly, they are people who keep coming back, as frequent travellers to the city, be it for work or leisure. Thus, they are owners much more likely to blend in with the local community, consume, get entertained, shop, care for the place and its people.
Flyway's co-ownership model could not be more timely, given that currently, most cities are in the middle of a looming housing crisis. Home prices have appreciated at a level that is unsustainable for most buyers. Flyway accumulates more owners into fewer homes, but without these owners losing any of the benefits they had when they fully owned a home themselves. In fact, Flyway owners enjoy even more benefits (akin to a hotel experience) in an asset they simultaneously own, and they got at a price that matches their budget and stay needs.
This contributes even more to mitigating the housing shortage and spiraling prices we're facing. This is not to say, of course, that co-ownership alone can solve this major problem of our times. But at least it is one of the million things we can do as a society to increase housing affordability.
Innovation through technology and new business models helps societies and our civilization move ahead into a greater future. At Flyway, our vision is to make managed co-ownership for second homes a great contributor in this direction.
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