Seaside charm fades as Tenby’s housing market crashes under second-home tax

Tenby, once a magnet for holidaymakers and second-home buyers, is now witnessing a dramatic shift as property owners scramble to offload homes in the wake of steep council tax premiums.
The local authority’s imposition of a 200 percent tax on second homes, later reduced to 150 percent, has prompted a surge in listings, with over a quarter of the town’s housing stock classified as holiday lets and 154 properties currently up for sale on Rightmove, though some suggest this number is artificially high due to a loophole allowing owners to list at “reasonable prices” for tax exemption.
The average home in Tenby now sells for £369,642 and spends nearly half a year on the market, with asking prices dropping by 4 percent in the past six months and the broader Pembrokeshire region seeing an 8.9 percent decrease, underscoring the scale of the market correction.
Estate agents report that the tax has fundamentally altered the market dynamic, with Calum Phillips explaining, “The second-home tax and the effect it’s had on the town is a conversation I have every day with buyers and sellers.
The majority of second-home owners are looking to either sell their properties or list not to get 12-months exemption.
Buyers know that there aren’t many second-home owners in the market any more because of the tax and that’s forcing down prices.” Despite falling prices, first-time buyers remain largely priced out, as most seafront properties lack essential amenities like parking and gardens, and many have been converted into guest houses or flats, making them unsuitable for families; Phillips notes, “Eighty percent of our stock is out of reach for first time buyers.”
The debate over the council tax premium has split local officials, with some warning of lost revenue and others questioning the sustainability of relying on such measures; Tory councillor Di Clements remarked, “I question the financial sustainability of this local authority if it relies on these council tax powers; when second home-owners throw in the towel where will the council go? In relation to second home-owners the message [we send] is clear: ‘We don’t want you’.” Meanwhile, council leader Jon Harvey cautioned, “On this proposal we are talking about £2.6m loss to the council, or about three-and-a-half per cent on council tax.
What additional services are you prepared to cut, or are you prepared to increase council tax over and above? I am not prepared to justify to our residents why I voted to reduce second homes tax and then put that burden or service cuts on them, they certainly will be worse off in my opinion if this goes through.” As Tenby’s property market recalibrates, the town faces an uncertain future, balancing its dependence on tourism with the challenge of sustaining its local community and economy.