What you need to know before buying a second home

Sarah Coles
·Personal Finance Columnist
·4-min read

For anyone struggling to get onto the property ladder, the idea of being able to afford a home of their own is such a distant dream that the thought of owning two is laughable.

However, research from Hargreaves Lansdown shows that more than one in four people say it’s on their bucket list for retirement, and one in 10 think it’s a realistic probability. So it’s worth exploring just how you might be able to get there.

The exorbitant cost of property won’t come as a surprise to anyone, and because second homes are often in a more desirable area, the price can be even more painful. The average property in Cornwall will set you back £300,000 — well over the £281,000 UK average.

But it doesn’t end there, because there are all the additional buying costs — including the extra stamp duty on a second home.

So, for example, if you were to buy a home for £300,000 (and you weren’t a first-time buyer) you’d pay £2,500 in stamp duty, but if you were a second home buyer that would rise to £11,500. It’s a handy reminder that as investments go, property is probably the least tax-efficient approach possible.

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Then there’s everything from the legal fees to the searches, and if you’re buying with a mortgage, there are all the associated costs.

While you’re unlikely to have quite as significant removals costs as when you bought your first property, that’s only because you have to buy an entire house full of furniture, and everything from beach towels to plates. And before you spend even a day of your holiday there, you need to add in the cost of decorating and fixing anything that the previous owners managed to sweep under the carpet.

Some people will manage to hit their goals entirely under their own steam. They save or invest every month to build a deposit for their own home. Then they plough every spare penny into paying the mortgage off, and then building a deposit for a second home and going again. This approach tends only to be available to those on high incomes, because for more normal earners, this is well beyond the realms of possibility.

Others will get there more quickly, by remortgaging their main home and using the cash to put down a deposit on their second home. However, this approach means juggling two mortgages, which increases your risks.

You may decide to rent out the second home for at least part of the time to help you pay the mortgages.

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However, you need to factor in the fact that this comes with added costs of turning the property around between guests, and managing anything they break. You won’t always be able to rent it out, and if there’s more serious repair and maintenance to be done, you may not be able to rent it for quite some time. You need to have a robust plan B for those times when you won’t have any rent to help you cover the mortgage.

Others will end up with a second property when an older family member dies, either because they inherit a property, or they receive money they can spend on one. But while this deals with one financial issue, it doesn’t deal with the other — the ongoing costs.

The regular bills can be eye-watering. The council tax may actually be higher if the council is trying to put people off being second homeowners. The utility bills may be lower because you use less, but you still have to pay the standing charges, which make up a large chunk of your bills. Plus you have to decide whether to pay for broadband or live with the inconvenience of not having it when you visit

And it’s not just the cost that needs to keep ticking over. You need to keep on top of the place too. There will be ongoing repairs and maintenance — often at short notice. You then have to decide whether to spend a small fortune on upkeep, or devote a portion of your spare time to looking after a home you may not have that much time to relax in.

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There will be some people for whom it’s worth it to have a home away from home, and the freedom to go on holiday as often as they like, for as long as they want. There will be others who like the idea of the dream, but the reality is a backbreaking and never-ending chore.

It means that if you do the calculations and realise it’s just too much of a stretch, you can at least console yourself that owning a second home isn’t all it’s cracked up to be anyway.

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