It's interesting to see that recent reports in many newspapers
are stating that investors are increasingly viewing property as an
alternative to stocks, shares and other investments. Owning a
holiday home or second home in the UK is certainly an attractive
proposition if you can afford to pay for it outright or fund the
deposit and monthly mortgage repayments.
However, you will also find a considerable amount of 'hidden'
costs that follow once you have made your initial property
purchase.
Fortunately, there's always the option of renting the property
out when you're not using it yourself. According to the travel
accommodation website WhereToSleep.co.uk, the number of tourists
visiting the UK rises every year but the amount they spend per
visit is decreasing significantly. It seems that cost conscious
tourists from overseas, and indeed the UK, are saving money on
hotels and opting to rent private accommodation. The website goes
on to say that this has created rise up up to 10% in private
holiday rental bookings this summer.
So, while the thought of owning a UK holiday home or second home
is tempting, it's as well to be aware of the less obvious costs you
will inevitably encounter:
Insurance
You may need specialist
holiday home insurance or
second home insurance. Your property must be fully covered with
both buildings and contents insurance, particularly as it will be
unoccupied or rented out at times. Inform your insurer exactly how
you intend to use the property to ensure you have the correct
policy in place for your requirements and always notify the company
of any changes.
Council tax
Currently, council tax relief is available for second homes and
vacant properties in the UK. However, all this could change as the
government is seeking views on its plans to give town halls the
ability to remove this tax break. If the reform goes through,
councils will be able to determine their own discount rate from
2013/14 - including the option of allowing no discount at all.
Furnishings and appliances
Most people like to make their holiday property a true home from
home. This means that, unless you have two of everything at your
permanent home already, you will need to buy all manner of items to
equip your new place. This will include everything from furniture
and kitchen appliances right through to sheets and duvets.
General running costs
It's a well known fact that the larger a property is, the more expensive it is to run. Ask yourself if you
really need to invest in a home with an excess of rooms to heat,
light and keep clean and decorated. Even if you intend to rent the
property out, holidaymakers are usually more than happy to 'cosy
up' for a week or two. In addition to the usual utility costs such
as electricity, gas and water, some rural properties may have a
septic tank rather than being on mains sewage. This will need
emptying every few years at your expense. Don't forget the extra
television licence too.
Maintenance
If you live far away, you may wish to employ a
gardener to tidy up the lawn, hedges etc every so often to keep the
property looking at its best and ever more importantly,
occupied.
Travel
Estimate how much it's going to cost you to get to
your holiday home and back each visit. With the soaring costs of
petrol and diesel, this is an important budgetary factor.
Letting agents
If you decide to rent out your property then
registering it with an agent can maximise its letting potential.
While this will obviously entail an additional outlay, the
alternative is to spend time as well as money managing and
advertising the property yourself. Also bear in mind you will be
liable for tax on the net profit you make through letting it
out.
If you rent out your home continuously then you
maybe interested in our infographic -
the hidden costs of renting out your home.
