Levelling the playing field - how to make life easier for Cornish residents when it comes to housing

A significant issue when it comes to housing in Cornwall is that local residents face competition from people from outside Cornwall who can sell a property in an area with high house values and then use the surplus to outbid local residents.  A related issue is one where people with more resources can purchase dwellings to use as a holiday home or holiday let. Developers often cater to this market by building properties at the luxury end of the market knowing full well that such properties will be out of the reach of local residents.

 

A potential solution can be found in the concept of an ‘enabling’ tax.  CoSERG developed this in 1988.

“The enabling tax would be a means of recognising that majority of outside purchasers have a considerable unfair advantage over local people.  It would be a simple tax. It would aim to tax incoming purchasers at a level to ensure that they buy an equivalent Cornish property at a similar price to which they received on the property they sold in their previous home.”

 

This in combination with other policies such as changing the use classes system and higher taxes on second and holiday homes would make a significant impact on housing in Cornwall.

 

An Enabling Tax: Cornish weighting

“This is a tax on purchasers from outside Cornwall. It would provide a mechanism to enable local people to have a reasonable opportunity of purchasing a decent home.

 

The enabling tax would be a means of recognising that majority of outside purchasers have a considerable unfair advantage over local people.  It would be a simple tax. It would aim to tax incoming purchasers at a level to ensure that they buy an equivalent Cornish property at a similar price to which they received on the property they sold in their previous home.

 

Correspondingly, local people would no longer have to face unfair competition from non-locals with greater resources.  Thus house prices should more-or-less reflect local income levels.

 

Income from tax could be used in two ways…

a)     for purchasing properties to be run by local authorities or housing trusts for rent to locals; and

b)     to make up the difference (within reason) between a Cornish person’s house sale price and the purchase of an equivalent property elsewhere in the world.

 

At present the Cornish people contribute towards the ‘London (or South East of England) weighting’ of the salaries of public servants who then migrate to Cornwall. 

 

The cost of living – and especially the house prices – in the South East is particularly high.  Those who live there are, quite correctly, due to some assistance in the form of what is known as a ‘London Weighting’, an increase in salaries of public servants and others. Cornish people contribute towards this ‘London weighting’ through their taxes.

 

But when these beneficiaries then migrate to Cornwall they bring their ‘London Weighting’ with them in the form of the capital raised through selling in the more expensive market there.  This acceptable financial support then becomes an unacceptable advantage over Cornish people whose incomes are generally at least a third below the level of these incomers from South East England.

 

It is right there that there is a ‘London weighting’, but it is also right that there should be a ‘Cornish weighting’.  This would be a means of using the advantages given in other weightings (after all, Cornwall is at the bottom of UK income league tables), to free local people in the Cornish housing market.

This ‘claw-back’ tax would ensure that outside purchases would be made at national equivalent price levels and inside purchases would be at levels that reflect local wages.  This would, perhaps limit the number of people who migrate to Cornwall primarily to ‘equity strip’ but would not stop those people who really want to live in Cornwall.”

  

Source

Cornish Social and Economic Research Group (CoSERG), (1988), Cornwall at the crossroads?