Knowing what to look for in a second home is more than just seeing a place within your budget and making an offer. So, if you want to be one of the estimated 5.2 million people who have a UK holiday home, here’s what you need to consider.
Second home or holiday let?
Before you start looking for a second home, you need to decide what the property is going to be used for. There are a couple of distinctions between a second home and a holiday let.
As an example, some properties are specifically built to be used as holiday homes only. These may not have permissions that’ll allow you to reside there all year round.
There are also differences in terms of the mortgage (if you are not self-financing the property). A second mortgage is very different to a holiday home mortgage, with different affordability checks for each and typically different minimum deposit amounts required.
It is important you seek financial advice and are happy with the specified use of the property. If, for example, you take out a second home mortgage but then you decide to let the property – even on an occasional basis – you must let you mortgage lender know before you do so.
Stamp Duty Land Tax
Whether you are buying a second home for the purpose of letting it out or purely for your own use, don’t forget the updated legislation that came in to force in 2016 relating to Stamp Duty Land Tax – these transactions are subject to an additional 3% tax.
Last year, these transactions made up 43% of the Treasury’s overall tax take, so it is unlikely these rules will change anytime soon.
When setting your budget, don’t forget to factor these additional costs in.
The initial research phase
The next step is to decide on a location. Here are a few things to consider:
- Is it close to your own home? If you’re planning to use your second property as a weekend getaway, you won’t want to spend too long on a Friday night driving for hours and hours.
- Is it picturesque? Choosing somewhere surrounded by countryside or close to the sea not only provides the perfect retreat for you and your loved ones, but it’s more likely to attract tourists. This consideration is essential if you’re going to let your second home as an AirBnB or a holiday let.
Note that in some areas, there are bans on people purchasing second homes – for example, St Ives in Cornwall.
This is because second homes drive up the overall property price of the area, which makes housing unaffordable for the locals. So, conduct your research with an open mind and be prepared to face restrictions. Some properties in your desired location might be reserved for those who live and work locally to purchase.
Know your obligations and double-check your affordability
If you’re considering renting to tenants or using the property as a holiday let, there are a few things to think about:
- Is the average rent charged in the area in line with what you are expecting for the sort of property you’re offering?
- Do you have the time and funds for you (or a lettings agent) to fulfil the legal obligations you’re bound to offer your tenants? For example, you’ll have to pay for an annual gas safety inspection, landlord’s or holiday let insurance, general repairs, etc.
You need to sensibly consider your maintenance cost budget (for both the expected and unexpected expenses). Holiday homes experience more wear and tear than a typical home due to the footfall of guests.
You’ll need to regularly redecorate and replenish the décor to keep things looking fresh.
Then, there are the practical things to consider like secure and accessible parking, and the costs of maintaining the garden (if you have one).
In the market for a second home?
Buying a second home can be both an exciting and daunting process. At Garrington we offer a complete property solution from property finding to negotiating on the price to attracting high rents. Please call us today on +44 (0)207 099 2773 for more information.