As both a fantastic investment option and a fabulous addition to your lifestyle the appeal of a second home is clear. The numbers speak for themselves as the number of people who own second homes in the UK rose to a record-high of 495,000 in 2018/19 - a 30% rise from the 382,000 recorded in 2013/14.
With the huge rise in popularity of digital platform property lettings companies, such as Airbnb and Booking.com, has facilitated short and long term lettings income from second homes, enabling early retirement or more flexible working options for some second home owners.
Why not speak to property law experts Slater and Gordon? As the UK's leading consumer law firm, and our trusted legal partner, they are committed to delivering exceptional and affordable legal services. and can help and advise on your options. Book your 30 minute free consultation today.
Renting out a second home isn’t always plain sailing, however, especially if you are managing the property yourself. Granted you get to keep more of the income instead of paying a letting agent, but you may find yourself checking emails and enquiries from different platforms, ensuring the property is clean and ready for renters, and generally trying to promote your property.
However you don’t have to make money from your second home, you may choose to keep it as a personal residence to enjoy escaping to at the weekends, during holidays and hosting friends and family to stay.
5 things to consider before buying a second home:
- You will need a larger deposit than you may have paid for your first home. It will need to be at least 15%, or 25% if you’re planning to rent it out.
- If you have not yet paid off your existing mortgage there may be strict affordability criteria that you need to meet for a second mortgage.
- You will have to pay an additional 3% (minimum) stamp duty land tax on your second home, on top of the normal stamp duty. You can use the stamp duty calculator to work out what it would be.
- Your mortgage rate may be higher on a second home, and you may need a specific buy-to-let mortgage if you plan to rent it out.
- If you decide to eventually sell your second home, you may have to pay capital gains tax.
If you’re keen to take steps to own a second property, but perhaps don’t have the cash available, you may be able to raise the deposit for a second home by using equity you have built in your current home by re-mortgaging.