Slashed prices and desperate sellers: inside Cornwall's flooded second homes market

Telegraph

14-05-2025

For the past 11 years, Debbie Pugh-Jones has owned Napier Cottage, a two-bedroom property overlooking a river in the quiet village of Golant near Fowey in Cornwall.
'It was a dream of mine to go and live by the coast, and when I found this cottage, I thought it was perfect,' she says. Lying at the mouth of a deep estuary, close to the open sea, Fowey is a pretty harbour town with narrow streets winding through the town near the water's edge.
Counted among some of the Cornish coastline's hotspots, it's long been popular with wealthy second home owners; in the past, this kind of property would have been snapped up.
Keen to move nearer to her son in Bath, Pugh-Jones put Napier Cottage on the market last August for £425,000. There were no bites.
Since that time, the asking price has been reduced first to £375,000 and now to £350,000. Still, no one has come forward to buy it. 'During Covid, I could have sold it for £440,000. I'm now on my fourth estate agent and, since August, I've only had three viewings and no offers.'
She lives in the house full-time, but it would make a perfect holiday home – and therein lies the problem. 'The trouble is that there are just no buyers,' she adds.
'First, there was the general election, then the Budget in the autumn and now all the increased taxes. It's not an expensive house, but the wind is blowing in the wrong direction for second home owners. When I speak to others in the village, a number are thinking of selling up.'
Cornwall is sometimes called the 'second home capital of England'. In Poluran, a village close to Pugh-Jones's home, more than half of houses are second homes or holiday rentals, according to research last year from the Lanteglos by Fowey parish council.
The attack on second home ownership has come thick and fast in recent months. In last year's Budget, buyers of second homes were hit with a 5pc stamp duty surcharge, up from 3pc. In addition, the furnished holiday lettings tax regime, which gave tax breaks to landlords who rented out fully furnished properties, was removed this year. This means that those properties which once attracted 10pc capital gains tax now meet the standard CGT rate for residential property, currently 24pc.
Finally, and perhaps most punitive, Cornwall council (like others) now makes second home owners pay double council tax, a move that was also introduced in April. (There is a 12-month exemption for those actively marketed for sale or let, which some experts have suggested is a loophole that homeowners are using to avoid the tax rise.)
'Flooded market'
Justin Knight is a senior valuer at The Property Shop, the estate agency in Fowey that is marketing Napier Cottage. It has two other offices in mid-Cornwall: Bodmin and Lostwithiel. While those two are operating in a normal market – that is, neither location is dominated by holiday homes – it is in Fowey where properties are not selling.
The same is true in two other holiday home favourites: St Ives and Carbis Bay, says Vicky Jones, of estate agent Keller Williams. She describes a 'marked increase' in the number of second homes and holiday properties coming to the market. Kevin James, of Bradleys estate agents, says supply is up 22pc since May 2024. He believes that Cornwall's property market is entering a new phase as tax reforms 'begin to reshape the second home landscape'.
Many agree. 'Fowey is a pretty sailing town, not a working fishing port which functions throughout the year, and the impact has been noticeable since the measures were announced last year,' says Knight. 'People who paid 'Covid prices', when the rush from towns and cities that saw prices here leap in some cases by up to 20pc, are reluctant or can't afford to sell at today's values. And now that the market is flooded with houses for sale, there's a double knock-on impact.'
Figures from Rightmove show that properties in Fowey take five more days to sell this year compared to 2024, and that prices have slipped 1.5pc in the last year.
Truro-based estate agent Ian Lillicrap of Lillicrap Chilcott keeps a keen eye on second home hotspots both within and beyond his patch, including the Cotswolds. 'The market is flooded in all the obvious areas. It's clear that many who bought properties to rent as holiday homes took out mortgages when rates were low and when they could offset the costs against returns.' Interest rates since then have of course risen, and now they face lower demand and much higher costs. 'They've had a culture shock and a rude awakening.'
'Fabulous bargains'
This fall in demand has mainly hit the middle of the market; those at the top end can afford to wait it out – and pay the increased council tax. Jonathan Cunliffe, who runs his own agency, says at the top end of the market it's back to normal after the frenzy of the pandemic. 'There aren't many owners who need to sell at any cost. Most will wait until the market recovers, so it's difficult to see a complete collapse in prices.'
James says that while those who relied on tax efficiencies to make ownership viable are selling up, those prepared to weather 'short-term policy headwinds' will continue to invest.
It is properties valued between £250,000 and £700,000 that have seen the highest drop in enquiries, says Philip Norgan of Smart Estate Agent in Penryn. Some clients are adjusting their prices, but others are holding firm 'because they can't afford to go as low as necessary'.
Lillicrap says there was a flurry of properties looking to exchange before the changes came in at the end of March, with a particular keenness from those in 'old money' areas such as Rock in north Cornwall. Some of these owners have had the house in the family since the 1960s and have seen a huge gain in value in the intervening years. A house that was worth tens of thousands might now be several million, attracting a significant tax bill in its wake.
Figures from Lillicrap Chilcott paint a picture of how the market has shifted. Of the last 60-odd properties sold since early April, 66pc have been to local buyers moving within Cornwall. In 2022, that figure was 50pc. Second home buyers have dropped from 25pc in 2022 to just 14pc. 'As I see it, those buying a second home with their head rather than heart will find it a lot less attractive than it was 18 months ago,' says Lillicrap.
For those with the means to buy, vendors are ready to sell. Lillicrap has just taken on a two-bedroom apartment by the marina in Port Pendennis in Falmouth. 'The owner said that only a few weeks ago she would have asked £600,000, but as she's in tune with what's happened across the nation, she's putting it on the market for £499,950,' he says.
'There are some fabulous bargains to be had,' adds Clare Coode, of buying agent Stacks Property Search. 'Canny agents are aware of this, and I have never seen more off-market opportunities than I have this spring.'
At the top end of the market, buyers are enjoying what Josephine Ashby of John Bray Estates calls 'a rare abundance of choice and a selection of property that may not reappear on the market for generations' as owners reduce prices. And people are still buying, such as those who snapped up an off-market clifftop property in Polzeath on the first viewing.