If you are a homeowner who has had thoughts of looking into buying a second home, be sure you understand the legislation around it. This is particularly important when you are thinking of renting out that property as a way of making some cash off your investment.
In research done, it seems that there are quite a few people who have considered buying a second property for renting out in the next 10 years. The problem with this is that they don’t consider what extra costs this will bring them in the long term.
In research done by insurance agency CoverBuilder, it was revealed that most people who would buy a second home have not looked into the costs. This includes the issue of extra stamp duty, surcharges, and the overall management of handling the financial side of a home that is either buy to let, or even a holiday home.
Based on the research, 1 in 8 people plan on buying a second property. Some 12% admitted that they are saving up to do this, even with the fact that the 3% extra stamp duty surcharge would be payable.
When asked where they would like to buy the property the results came back saying 16% in the South East, 15% in the South West, 10% in the North East, 12% in Scotland and 9% in London. This is interesting based on the fact that the property prices will differ significantly, especially those looking to the South East and London.
On the negative side the research also found that 21% of people no longer wanted to buy a second property. It was revealed that 64% of people who had decided against this gave the reasons being the string regulations and legal requirements that were in place, especially when choosing buy to let.
It was also revealed that 27% didn’t want the hassle of having to keep up the maintenance work that would be needed on the home. The unpredictability of being able to find an occupant for the property also put 12% of customers off too.
Finally, those that weren’t looking to own a second property revealed they had other priorities. These included looking into extending their existing home, which included loft conversions and conservatories. Another more suitable option included using those potential funds to pay off their mortgage early instead.
Looking at the results, it is obvious that while it may seem like a good investment at the time, the actual financial cost on top of buying the property was a stumbling block. It also shows that research is important before making any investment, especially one that is as big as a second home.