Fewer investors bought second homes in the UK last year, with only 366 properties purchased as holiday homes compared with 6,212 in 2009. But those who did buy can look forward to a strong lettings market this summer, agencies say.
The buying slowdown comes ahead of next month’s implementation of a more stringent tax regime for owners of furnished holiday lets. From April 6, holiday rental owners will be able to offset trading losses only against income from the same business – rather than the current rule whereby a holiday homeowner can offset losses against any other income.
Tax experts have warned that the changes will reduce the attraction of owning a second home for those who rent out their properties for a portion of the year.
Last year, Knight Frank forecast a 2 per cent rise in the number of second holiday homes in 2010 on the back of more people holidaying in the UK. However, figures this week from the property agent show that this sector of the housing market grew by only 0.1 per cent last year.
“The main drag on the growth of this sector has been lack of supply,” says Liam Bailey of Knight Frank.
However, agents around the UK have reported less demand from buyers wanting to buy a second home for holiday letting purposes.
“Along the west coast, buyers are definitely taking income into account but we are seeing few buyers looking for purely holiday let properties,” says Andrew Perratt, head of residential at Savills Scotland.
Peter Reilly, another property agent at Savills, says there is currently a mismatch between buyer and seller expectations, with sellers expecting that the market will heat up again in the second quarter – the traditional buying time for holiday home investors – while buyers are waiting for later on in the year, when they think prices will have fallen.
But now may be a good time to buy a holiday home as letting agencies have reported signs of strong summer demand for self-
In the first six weeks of this year, bookings for UK holiday home lets were up 11 per cent at Cottages4you, part of the Hoseasons Group, which has more than 10,000 properties throughout the UK.
Certain second-home destinations are proving particular buoyant. Figures from Knight Frank’s Exeter office, which manages second homes from Cornwall to Somerset, shows that bookings for self-catering rental properties in February this year were up by almost 70 per cent compared with a year ago.
According to Hoseasons, the Isle of Wight is currently seeing the greatest occupancy for the summer, followed by west Cornwall, Anglesey in Wales, Dorset and north Cornwall.
“What we’re also seeing, especially out of the peak summer time, is a shift to other areas of the UK, such as the Lake District and Hampshire – places which have shorter drive times and plenty of activities nearby, ideal for making the most of a long weekend,” explains Geoff Cowley, managing director of Hoseasons.
Over the Easter break, the Lake District has the highest occupancy, followed by Dorset, Bath, Hampshire and the west coast of