Second Homes, Pros, Cons and Options

The rise of second home ownership in the UK has been phenomenal, spurred on by increasing wealth and the advent of the internet that has allowed owners to sub let their homes. Today, there are around half a million second homes in the UK that are not permantnetly rented out. These properties tend to be in holiday hotspots, around the beaches especially in Cornwall and Devon or in beautiful locations such as the Lake District, National Parks and rural areas.

The problem with the rise in the popularity for second homes is that their prices have gone up, in many cases very significantly. Thus, local families in second home hot spots can rarely afford to buy a new property. Examples include Salcombe, St Ives, Padstow and Croyde where properties now do literally sell for millions. Not only does that price out locals, it also prices out many families that want to buy a second home as a permanent holiday base.

Holiday homes have proved to be an outstanding investment over the last 20 years and if you are lucky enough to have bought one 20 years ago, its value would typically have increased by more than the standard house price increases. Whilst second homes have represented a great investment, that may not be the case moving forward with several areas including St Ives and Wales now actively trying to prevent new builds from being used as second homes.

If you can sub let a second home, usually as a holiday cottage through sites like AirBnB or with an agency, you can usually make a considerable amount of money from letting which enhances the return on top of the investment gain in the property itself. There are of course bills to pay including standard utility bills, local authority taxes and the up-keep that eat into the letting income. The end result though is that second home ownership is here to stay, like it or not, these properties generally make more from holiday letting than standard buy to lets.

Second home ownership is now transforming into other areas as the lack of supply and high prices of properties mean that second homes are generally out of reach for many people. Holiday parks are now being developed to offer cheaper alternatives such as luxury static caravans and holiday lodges. The benefits of having owning your own static caravan or holiday lodge is that you can use your own home for most of the year with many parks now open for 11 months of the year. You can also usually sub let your lodge or caravan in much the same way as you could with a holiday house.

The big difference though is that a holiday lodge or static caravan depreciates in value and they have limited life spans, Holiday lodge and caravan licences are typically 30 years and 15 years respectively if bought brand new, meaning that your asset depreciates rather than appreciates. However, the initial outlay is often vastly lower than for buying a house and you can usually repay the cost through sub letting at similar prices to a house with a lot lower level of money to return.

This has now driven a significant level of demand and resultant supply for static caravans and lodges on holiday parks for sale privately. There are an increasing number of parks now offering caravans and lodges for sale on the park itself rather than being retained by the parks owners. For some people now priced out of the holiday home market, this offers a more affordable solution to the second home conundrum.

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