Second home owners in Devon could be asked to pay business rates to ensure they contribute to local communities to try and preserve the property market for local people.
There are calls for the new legislation in areas such as Salcombe where up to 65% are classed as second homes.
The average prices of these houses exceeds £750,000 meaning locals are often left priced out of the market. Salaries in the area are far lower than the national average.
South Hams District Council has now said it will try to ensure that all newly-built homes in the area are only used as a primary residence, but some business owners and residents are concerned about the ongoing issue.
Salcombe's population grows from around 2,000 people in the winter to more than 20,000 during the summer holiday months.
That figure is expected to be higher this year, with people switching holidays abroad for staycations in the UK because of the coronavirus pandemic.
The council is now stepping in to try and kerb the issue before it gets out of hand further.
The housing crisis also means businesses are struggling to find accommodation for local employees.
One shop owner, Lucy Thompson, said the problem has been getting worse over recent years and businesses are struggling to get people to fill job roles because of the lack of low-cost houses in the area.
"It is an issue for people who want to work in town," she said.
"There are just no opportunities for people to purchase or rent any low-cost housing.
"It has been difficult, in the last few years the pressure on housing has been quite immense and it is coming for businesses."
The price of property in the town has increased by more than 10% in the last year alone, a trend which has followed the housing market right across the region and in to Cornwall.
Average house prices in Cornwall are now eight times more than the average salary in the county, leading to what has been described as a housing crisis by some members of Cornwall Council.
An estate agent in the area said the market had been significantly impacted this year as a result of the pandemic and people looking to holiday in the UK.
"It has been particularly difficult this year," Theo Spink said.
"There has been huge pressure and a lot of holiday homes have been purchased. Applied pressure for prices and has made it more unaffordable for residents.
"As Salcombe becomes more expensive people are looking for holiday homes in other areas."