Coatham began as a market village in the 14th century to the smaller adjacent fishing port of Redcar but as their populations grew from the 1850s, the dividing space narrowed. Though Coatham is now only a mile-wide district in the town of Redcar, the need for definition was strong enough to warrant the western boundary being marked by a fence which ran the length of West Dyke Road and West Terrace. Coatham comprises the remaining coastal land north of the railway line from West Dyke Road to Warrenby in the west.
Since the mid-1990s political debate has been generated amongst Coatham's five thousand residents as to the future of the last undeveloped section of Coatham's coastal land known as Coatham Common/Coatham Enclosure - for the last 25 years used as a golf course and local recreation area. Residents are objecting at losing open space to the council's proposed housing and leisure development planned to revive the tourist industry. The Supreme Court of the United Kingdom announced on 3 March 2010 that Redcar Council must register the land as a Village Green.