Second homes: A second to yourself

By Diana Wildman
Posted: 2010/07/02

LAST summer, owners of second homes in Britain achieved record-high rental returns as more and more of us decided to opt out of airport misery and dreadful foreign exchange rates.

Now that last week's Budget proposals have been pored over and found to be less painful for potential buyers, Liam Bailey, head of residential research at Knight Frank, predicts that both sales and rentals will be brisk this year with projected rents for 2010 expected to be higher.

Mr Bailey said: "The Capital Gains Tax (CGT) rise was less painful than expected so a short term surge in second home purchases will surely follow.

"Early evidence suggests that the second-home market, which was very strong up until the CGT rise was first mooted in May and then promptly stalled, will kick back into life very rapidly."

Tony Fox, managing director of UK holiday home business Pure Leisure Group, also welcomed the abandonment of tax changes for holiday-home owners announced in the coalition's first Budget.

Mr Fox explained: "The old Labour administration had planned to abolish much of the tax relief on furnished holiday lets but luckily the new Chancellor, George Osborne, announced that costs can be offset against other income and there will be no changes to the capital allowances for refurbishment."

He added: "Our own-to-let scheme at South Lakeland Leisure Village enables people to buy a holiday home for much less than a bricks and mortar equivalent.

"It will then generate a substantial rental income. There are enough demands on every penny that we earn nowadays: we see this as being a way of showing financial prudence while still providing an investment in your leisure lifestyle.

"[For] example, if a customer buys a £150,000 lodge they could then expect a gross income of more than £15,000 per annum via our lettings business. The numbers then really make a fairly compelling argument." Louise Western, 31, from Storth, Cumbria, bought two lodges at Pure Leisure Group's South Lakeland Leisure Village, near Carnforth in Lancashire, last year and has been letting them to holidaymakers.

Priced from £65,000 to more than £200,000, lodges on the South Lakeland Leisure Village come fully furnished and equipped. Rents for a two-bedroom lodge are from £250 per week in the low season to more than £825 at peak times. Those with four beds fetch between £430 and £1,200 per week.

"I had some money to invest and wanted something that was going to be long-term and would provide a regular income, " said Louise.

"The team at South Lakeland Leisure Village takes care of all the bookings and cleaning for me and if I want friends to stay, they can."

Built around the edge of a large man-made lake popular with wildlife, South Lakeland Leisure Village features a range of properties including eco-friendly lodges in the heart of the site's award-winning conservation areas.

All owners and guests have access to the on-site facilities, which include a restaurant, bar and leisure complex complete with gym, pool and beauty therapy suites.

Many of the holiday home developments Knight Frank is marketing in the South-west are guaranteeing rentals for a period of time from completion. These include Saxon Maybank, a cluster of new stone barn conversions, an eco-development built by Charter Oak Estates set in rolling hills just three miles from Sherborne in Dorset. Prices start from £155,000.

Gail Streatfeild of Knight Frank said: "Charter Oak Estates has built these homes with a true environmental conscience that will appeal both to potential purchasers and the holidaymakers who may in the future be their customers. Not only are the lodges stunning, high-specification holiday homes but they blend into their surroundings sympathetically so as not [to] intrude on the tranquil atmosphere."

Located on the boundary of Bovey Tracey in Devon, Indio Lake consists of 12 new waterside lodges priced from £165,000 through Knight Frank. Dotted around the edge of the lake within an area of significant amenity value, each eco-friendly home has been designed to blend in completely with the woodland environment.

Although seemingly excellent value for money, it must be remembered all lodges designated for second-home usage are just that. None can be a main residence.

Wavering buyers who prefer the idea of a holiday home that could eventually be used for permanent living could consider Seaview Court, a smart new courtyard development overlooking the sea in Mundesley, north Norfolk. Prices start from £175,000 for a one bedroom apartment through joint agents Bidwells and Knight Frank.

Dating back to Victorian times, this former hotel has been stylishly converted and each home has been pre-wired for broadband, Wi-fi and satellite TV. It is close to many leisure facilities, including golf, but as with most seaside apartments suitable for year-round living there are no tourist facilities on site.
David Walker of Bidwells estate agents said: "The market in north Norfolk is now offering high-quality property at the keenest prices for years. As an investment, yields are also better as prices have fallen and rental values have remained solid."

INFORMATION:
South Lakeland Leisure Village: 01524 784784/ www.pureleisuregroup.com
Saxon Maybank and Indio Lake: 01392 848844/www.knightfrank.com
Seaview Court: Bidwells: 01603 229336/www.bidwells.co.uk or
Knight Frank: 020 7861 5499/ www.seaviewnorfolk.com