Second homes should pay their own way

Second home owners could consider letting their homes to holiday makers to help meet the increasing costs of financing them rather than feeling pressure to sell them in the current housing market says specialist independent mortgage brokers Mortgages for Business.

There are an estimated 240,000 English households with second homes that are not rented out on a holiday let basis and there is speculation in the market that there could be an increase in the number of people looking to sell or rent out their properties on a long term basis.

David Whittaker, managing director at Mortgages for Business comments: “Turning your holiday property into a holiday home for others to enjoy could provide you with a good return on your investment while still enabling you to still enjoy the property. There may be many second home owners who are tempted to sell up in case house prices fall, however they could also consider letting”.

A property used as a holiday let would tend to be financed with a commercial mortgage which has different requirements for the deposit, length of mortgage and mortgage pricing which tends to start at base +1.5% to 3%.  Rates will depend on factors such as occupancy and demand in an area.  There are a small number of niche lenders who offer holiday Buy to Let mortgages (such as Scarborough building society), and they therefore work on a rent to interest basis.

David Whittaker continues: “The credit crunch may encourage more people to holiday in the UK over the next couple of years rather than overseas so good quality properties will remain in demand for holiday homes. The typical rent provided by investing in a holiday property will be higher than that for a normal Buy to Let property although demand for the property will obviously be seasonal. Investment in property should always be a long term strategy so if you still get to enjoy your property and can make it contribute towards its running costs then this is an interesting opportunity to consider”.