House prices have fallen in 20 of the 25 English local authorities with the highest concentration of second homes, according to new Rathbones analysis, as tax changes and weaker returns put fresh pressure on additional-property ownership.
The wealth manager said the pattern had deepened by the first quarter of 2026, with South Hams in Devon – the English authority with the highest share of second homes – recording an annual price fall of 6.6%. Separate government figures also showed the number of second homes in England has dropped by about 12,000 since 2024.
For landlords and holiday-let investors, the immediate relevance is that higher holding costs are no longer being offset by reliable capital growth in many of the country’s best-known second-home hotspots. That makes disposal, refinancing and repurposing decisions harder, especially where stamp duty and council tax premiums have already raised the cost of sitting tight.
Tax changes are hitting second-home hotspots
Rathbones said 80% of the 25 English authorities with the highest concentration of second homes saw annual price falls by early 2026. That compares with a much lower share across the wider market and points to sharper weakness in coastal and rural areas that had previously benefited from lifestyle demand and scarcity pricing.
The backdrop has changed quickly for owners of additional property. The stamp duty surcharge on extra homes rose from 3% to 5% in October 2024, while English councils can now levy a 100% council tax premium on second homes. In Wales, councils can charge as much as 300%.
Charlie Newsome, senior investment director at Rathbones, said rising borrowing costs and weaker capital gains had undermined the long-term case for many holiday homes and buy-to-lets in parts of southern England.
This follows Residential Landlord’s recent coverage of MPs pressing for stamp duty reform, which highlighted the growing tax drag on housing mobility and investment. It also sits alongside Residential Landlord’s reporting on investor exits in parts of the rental market, suggesting some owners are becoming more selective about where additional-property exposure still makes sense.
Why this matters for landlords now
This is not the same as saying landlords and second-home owners face the same market. But it is a warning that the old assumption of easy appreciation in tourist and lifestyle markets looks weaker than it did even two years ago.
For investors already carrying higher borrowing costs or facing larger local tax bills, a softening resale market reduces room for error. If values continue to slip in second-home-heavy districts, some owners may decide to sell earlier, switch use, or avoid adding stock in areas where policy pressure is still rising.
Opinion
Second homes have become an easy political target, but the investment case is now weakening on its own terms as well. When higher taxes meet falling prices, the real question is not whether ministers approve – it is how many owners still see the risk-reward balance as worth it.
