The great Sandbanks gold rush might be over – with properties failing to sell and developers shutting up shop after local authorities were given the power to double council tax on second homes.
Known as a bubble for the ultra-rich for its luxurious houses on idyllic beaches, the Dorset enclave has drawn in the likes of Harry Redknapp, Karl Pilkington, John Lennon and Liam Gallagher over the years.
It sits alongside the ever-desirable hubs of Monte Carlo, Basel and Palm Beach as the fourth most expensive place in the world to buy a house, and Britain’s most expensive postcode.
But the scramble to live in the UK’s most exclusive second-home neighbourhood looks to be finished – as estate agents and developers have revealed a staggering drop in demand.
The Sandbanks bubble, it seems, has burst – and the blame has been laid squarely at Keir Starmer’s door.
Lola May Massingham, CEO and Founder of Prime Coastal Property said a semi-detached home on the waterfront can go for up to £8million, but the government’s war on the rich means there are fewer people willing to spend.
She told MailOnline: ‘There’s been a big difference in how the market has changed in the last 12 months. You’d expect this time of year to be really busy because that’s when everyone comes down, but it has been quieter.
‘There’s a lot of properties on the market and not enough buyers. That’s the honest truth.
‘Labour’s double rates are really not helping. Buyers are more nervous now because there doesn’t seem to be any good announcements from the government and there is a lot of uncertainty in the world, so a lot of people have said they’re holding off.’
Are you struggling to sell your second home? Email: jon.brady@mailonline.co.uk
Keir Starmer’s government has been blamed for a drop-off in the second homes market
The great Sandbanks gold rush might be over as properties in the UK’s highly sought after and most expensive postcode are struggling to sell
One four bedroom property (pictured), which is only a two-minute walk from Sandbanks beach and Canford Cliffs Village was listed at £1,750,000, following a £100,000 price reduction last November
She added: ‘With the cost of living, now is not a good time to buy. There hasn’t been any incentives to help people buy homes and so they are looking abroad where there are governments who do.
‘It comes down to the current state of the economy, tax is a big reason and so places like Dubai are soaring and Portugal is doing really well too.’
Prices in Sandbanks, Dorset, the priciest coastal peninsula of all, are down three per cent from two years ago, according to a recent report by Lloyds.
Town halls were given the power to double council tax on second homes on April 1. The policy was introduced in the Levelling Up and Regeneration Act by Rishi Sunak’s Conservative government in 2023 – but its adoption was then continued by the incoming Starmer government.
The Liberal Democrat-run Bournemouth, Christchurch and Poole (BCP) Council, which covers Sandbanks, among the more than 200 authorities who elected to impose the hike.
Figures from the Ministry for Housing, Communities and Local Government (MHCLG) show there are 4,991 properties classed as second homes in BCP – of which 158 are Band H, the category reserved for the most lucrative retreats.
Second homes make up just over three per cent of the total housing stock in the area, above the national average of around one per cent, and BCP has more Band H second homes than average too.
The council could collect millions of pounds of additional revenue from these properties each year – unless some are flipped into holiday lets for at least a fifth of the year, which would exempt them from council tax.
BCP declined to provide a comment for this article when approached by MailOnline.
But experts also blame Chancellor Rachel Reeves, who hiked the additional stamp duty paid on second homes from three per cent to five per cent in her stinging budget last October.
Experts say the doubling of council tax on second homes, plus the hike in stamp duty imposed by Chancellor Rachel Reeves (pictured) in her first Budget, have wreaked havoc on the market
Lola Massingham, CEO and Founder of Prime Coastal Property said a semi-detached home on the waterfront can go for up to £8million (pictured: a balcony view of the peninsula)
A five-bedroom harbourside mansion a stone’s throw from the ultra-exclusive Sandbanks peninsula waterfront sold for almost £16million last year
Prices in Sandbanks, Dorset, the most pricey coastal enclave of all, are down three per cent from two years ago, according to a recent report by Lloyds
The waterfront homes on Poole Harbour are some of the most sought-after properties in the world
Since the 1960s many of the older properties have gradually been demolished and the plots sub-divided and replaced with large detached houses or blocks of flats
Sandbanks has been one of the most desirable places to live in the UK for more than two decades. It has attracted celebrities like Harry and Sandra Redknapp
For a property worth more than £1.5million – Sandbanks territory – the total stamp duty applied to a second home is 17 per cent. Overseas buyers and non-UK residents pay an additional two per cent.
Ms Massingham added that the pandemic saw a major surge in buyers rushing to the seaside town, but now that life has settled people are less intrigued – yet agents are still overvaluing the homes.
She said: ‘Prices massively escalated during Covid and went up more than £200,000. It was a time when people made decisions about buying second homes or moving, but now the market has levelled out.
‘It is quite flat and a house won’t sell now for what it did four years ago. There are some properties that have been on and off the market for years fluctuating in price and struggling to sell.’
However she insisted: ‘Although the market is not as strong I am positive that things will pick up.’
One four bedroom property, which is only a two-minute walk from Sandbanks beach and Canford Cliffs Village was listed at £1,750,000, following a £100,000 price reduction last November.
Sandbanks property developer Richard Carr made a record-breaking sale just nine months ago – but has gone bust due to financial struggles.
He set a record sale price last November for a single piece of land in Poole when his business sold a plot for just under £16m.
But he has confirmed his company Fortitudo has ceased trading and blamed the government for the state of the luxury housing market.
He said: ‘Residential property is very, very difficult to sell, particularly high-end property, and so we have decided to shut the businesses as it was.
‘We closed it because we just can’t sell anything, can’t make any money.
‘If you talk to estate agents – we had nine properties on ranging from £1.4m to £2.8m – and there are just no buyers. The only way you could sell them was by heavily discounting them.
‘Labour have brought in double rates on second homes. A lot of homes in Sandbanks are second homes so all of a sudden that second home market has all but evaporated.
‘The economy is absolutely shot, and my personal view is things are going to get worse.
‘We all know there’s tax rises coming again in November and there’s a real lack of confidence in the market.
‘I see no light at the end of the tunnel whatsoever of the market improving and its very sad, but it’s the unfortunate byproduct of the current administration.
‘Everything is very difficult since this government have been in power. It was bad enough with the Conservatives – now it’s ridiculous.’
Sandbanks (pictured) was a largely deserted headland in the Victoria era until a hotel was built in the 1880s and then 40 plots of land were put up for sale at public auction in 1896
There is concern the millionaire’s row in Poole Harbour, Dorset, has been blighted by a ‘rash of unimaginative and poorly considered’ waterfront mansions over the past 20 years
The craze to get your hands on a second home in the dream-like town has waned (pictured: a bungalow that sold for £13.5million in 2023
The Sandbanks bubble could be about to burst amid a drop in demand (pictured: a stretch of the Sandbanks waterfront)
Parkstone Yacht Club (pictured) is sited next to a row of lucrative harbour-view homes
Property expert Jonathan Rolande also told MailOnline the end of the pandemic has played a part in Sandbanks losing its appeal.
‘During Covid we couldn’t imagine getting on a plane, but the rush is over now and we’re back to reality. Why spend millions to chance bad weather in England when you can buy somewhere abroad for much less.’
He added that the craze to get your hands on a second home in the dream-like town has waned as buyers battle a dire economy and are being wiser about where to invest.
‘The market is pretty flat. Super luxury properties used to be immune from this but now they’re not. The council tax on second homes doesn’t help and there’s super high stamp duties.
‘For a normal buyer that stamp could be around £300,000 which is quite the chop.
‘It’s going to become quite common now where house prices are being reduced. This should be prime time for sales but it hasn’t happened so a lot of owners think it’s now or never and will cut the price.
‘If it’s not doing well now it’s only going to get worse in winter. Property surprises everyone all the time but it’s going to be a tough autumn and winter unless we see the interest rates drop.
‘The economy affects people directly and with interest rates being so high, people can’t afford a home like they may have been able to a few years ago.’
He added: ‘It’s absolutely vital the economy does well because you can never have a good property market in a bad economy.’
‘The light at the end of the tunnel will be interest rates going down. There are clouds on the horizon, though it’s not raining yet.’
An MHCLG spokesperson said: ‘We know that there is a desperate need for homes, and having too many second homes in an area can exacerbate the housing crisis by driving up housing costs for local people and damaging public services.
‘As well as delivering our stretching target of 1.5 million homes so we can restore the dream of homeownership, councils can also choose to add up to 100% extra on the council tax bills of second homes to help local leaders protect their communities.’
