A substantial number of home owners in the UK would like to buy a second home in the next 10 years but many of those wishing to rent it out do not understand the costs involved.
One in eight are planning to buy a second property with 12% saying they are saving to do so despite the fact that an extra 3% stamp duty surcharge is payable, according to a new survey.
However, the research by insurance agency CoverBuilder, reveals that the majority of would be second home owners have not examined the costs such as extra stamp duty, surcharges and managing the property financially with regard to renting as a buy to let or as a holiday home.
Home owners in the South East were most likely to want to buy a second property with 16% planning to do so, followed closely by 15% in the South West, 12% in Scotland, 10% in the North East and 9% in London.
The research also found that of those who have considered buying a second property in the past, 21% no longer want to do so. When asked to reveal why they’d come to this conclusion, the majority, some 64%, said it was due to increasingly strict regulations and legal requirements for buy to let owners.
On top of this some 27% said they no longer wanted the hassle of on-going maintenance work on a second home and 12% said they were put off by the financial risks of not finding suitable tenants.
‘In theory there are many benefits to owning a second property, but unless you are fully prepared for the reality of the additional financial costs, legal requirements and have a sufficient amount of funds to fall back on, then it might not be the best financial investment,’ said the firm’s spokesman Rob Rushton.
‘The potential risk of purchasing a home that ultimately won’t have an immediate tenant combined with increasing regulations and rules surrounding a second property will have Britons questioning whether they are truly prepared for both the financial and administrative commitment,’ he added.
The research found that buying a second home was not an overall top priority with 59% saying they would rather spend money on an extension, loft conversion or conservatory, 47% wanting to remodel their existing home and 28% seeking to pay off their mortgage sooner.