Second homes
May 12, 2014
Whether for profit or pleasure, handled well a second property can offer sizeable financial reward
Locations with good road and rail links are high on the list of desirables for tenants
Nick Dunning
Measure up
‘Investor buyers will need to consider yields and should avoid buying too big a property. A well-appointed two-bedroom home may offer the best yields. For example, a two-bedroom holiday cottage worth around £250,000, in good order, can generate a 10% yield. Also, don’t be tempted to buy a big garden that requires a lot of maintenance — a patio or paved courtyard might prove more practical.’ Jonathan Cunliffe, Head of Residential, Savills Truro
Look ahead
‘Buy in a place where changes that are happening will make it more attractive in the future — with higher rents and house prices. Do your research to avoid areas that are overhyped — look for areas that are becoming more fashionable.’ David Lawrenson, author of the UK’s bestselling property book Successful Property Letting
Get connected
‘Locations with good road and rail links are high on the list of desirables for tenants, making these types of places reliable for buy-to-let investment.’ Nick Dunning, Commercial Director,Countrywide Group
Time it right
‘With holiday homes, the most important factor to study is time: the time it takes to get there. A five-hour journey there and back can take the gloss off a weekend away. For landlords, it’s the length of the season, which can vary enormously. In Cornwall, for instance, this can range from locations with lettings seasons stretching to 40-plus weeks, to others that barely last 20.’ Jonathan Cunliffe, Head of Residential, Savills Truro
Remember your advantage when it comes to negotiating. As a chain-free, buy-to-let investor, you represent the same desirability as a first-time buyer.
The figures
Increase in property values in 2013 for UK properties
| Region | Average return |
|---|---|
| Scotland | 6.6% |
| Midlands | 6.5% |
| Wales | 6.4% |
| East | 6.2% |
| South East | 5.9% |
| North | 5.8% |
| South West | 5.7% |
| Central London | 4.8% |
| Bedrooms | Average return |
|---|---|
| 1 | 6.8% |
| 2 | 6.4% |
| 3 | 6.1% |
| 4+ | 5.4% |
If you are thinking about investing in a second home, make sure that your home insurance policy will stretch to cover both of your addresses. At Hiscox, we offer second home insurance as an optional extension to your standard home insurance policy. Make sure that you explore all your insurance options, including holiday home insurance over, available through our high quality home insurance.
