The St Ives referendum on second homes is a protest against success

"Local politics reduced to pointless populist posturing"

April 14, 2016
St. Ives, Cornwall ©Char
St. Ives, Cornwall ©Char

St Ives, Cornwall ©Char

On 5th May the town of St Ives in Cornwall will hold a referendum on second homes. Burdened by its own popularity—a couple of years ago it was the ideal place to live in the UK—locals are striking back at holidaying visitors and the second homes they buy in the town. The proposal put on the ballot is to amend planning decisions so that, while homes already built in the town could still be sold on to new-comers, brand new developments can only be sold to those who live nearby. This is local politics reduced to pointless populist posturing.

It is first and foremost a protest at success. The beauty of St Ives transcends its remoteness and the difficulty of getting there from most of the country. This is rare for coastal towns in the UK. Many have struggling economies and unemployment with at best an uneasy social mix of retired people on fixed incomes, a rental sector split between the unemployable and hard working Eastern Europeans—even hipsters hoping they have found the new Brighton or Margate. A popular seaside town with the wealth that tourism and second homes bring is not a problem; it is something that should be welcomed.

It is also a policy doomed—Canute-like—to fail. The central problem it seeks to address is local people being priced out of home ownership. But the referendum places the blame on new-comers who (it is claimed) increase prices because their desire to live in the area means the demand for homes exceeds the supply. The referendum proposal limits the number of houses which can be bought as second homes. This creates two problems, which are related to one another. One the one hand, it restricts by a small amount the number of houses on the open market, which will simply increase the price of these houses. This defeats the object of planned reform. On the other, it creates a new and valuable asset that can only be bought by local people. While that may keep prices down marginally it will effectively hand a lottery ticket to the house's lucky first owner. They can sell this home on to an outsider—and at a premium that reflects the new restrictions. (Before anyone raises the possibility of covenants that prevent the onward sale of new homes, I have yet to meet a developer unable to get a covenant removed from land.)

The problem is that rising house prices are, at base, a supply problem. Sure, that can be dealt with, but it takes a house price crash as in the early 80s or a Great Recession as in 2007/8. Those have a heap of externalities. A supply issue needs a supply solution. What St Ives needs is to loosen its planning controls, not tighten them. Making more land available, more rapidly, offers the best chance of addressing rising house prices.

This goes directly to the tension in much housing policy. The people who live in a desirable area like St Ives and those who want to live there share one characteristic: they love St Ives as it is now. But, in the words of Giacomo Leopardi: "If we want things to stay as they are, things will have to change." Managed growth is what St Ives needs—a planned expansion of houses to rent and buy. To achieve that, to strike the balance between the numbers of current and future residents, true political leadership is essential. This has happened in St Ive's before—it is what brought the Tate art gallery there in the early 90s. It is is what has secured the town's future as it has retained a distinctive character.

The ultimate problem with the referendum proposal is not that it will fail, it is that it is intended to fail. Populist politics is never about making a new system work; it is about exposing the current system as a failure. This referendum will channel the understandable desires—and potential anger—of local residents not into an energy to solve. It will channel them into a frustrated grievance on which they can brood. The vicious and unbroken circle.