There are so many things in life that are better rented than owned – skis, boats, jacuzzis. Surely holiday homes are high on that list too?
I firmly believe that they are, so why then do I – and many doctors and dentists that I speak to – still want one?
The list of reasons why buying a holiday home is a waste of money is long. At least that’s what I keep telling myself.
Stamp duty costs
Accepting the stamp duty costs you have to pay when you buy a second home in the UK has always been painful. Now it requires an anaesthetic!
From the 1st April 2016, if you purchase a residential property that is not your main residence, you have to pay an additional 3% on each Stamp Duty Land Tax (SDLT) band*. You may need to scroll left and right if you’re viewing the table below on a small screen.
|Band||Before 1st April 2016||After 1st April 2016|
|£0 – £125,000||0%||3%|
|£125,001 – £250,000||2%||5%|
|£250,001 – £925,000||5%||8%|
|£925,001 – £1,500,000||10%||13%|
Ongoing running costs
Most of us know how much it costs to run a house. There are the ongoing gas, electricity, council tax, and insurance costs to pay. There are also the ad hoc, sometimes unavoidable yet invariably unexpected maintenance bills: a new boiler, fixing leaks and blockages, replacing roof tiles. New kitchens are seldom cheap; nor are bathrooms.
It costs a lot to update and maintain one property let alone two. Oh and did I mention that you have to pay for all of this out of your net income!
If you are looking to buy a second home abroad then let’s not forget the currency risk. Do you really want to convert sterling into Euro’s at the moment? For all we know, it may only get worse.
In many instances, medics and dentists buying property in foreign lands will gain or lose money not so much because of house price fluctuations, but because of currency movements.
The time will eventually come when you want to sell the property. You will have to pay estate agents fees. Estate agents in France for example, make our English counterparts look very cheap.
Even if you have been fortunate enough to make some capital appreciation on the property, you may also have a tax liability to pay.
Never-ending to do list
Are you someone who likes to go back to the same place every year or do you prefer the freedom to travel? Even if you do go back to the same place, how often is it for…one week, maybe two?
Whichever your preference, if you just rent the property that you’re going to call home for the next few days/weeks, you only have to arrive, have fun, and go. It’s a pristine home when you get there and somebody else’s problem when you leave.
If you own the place, you switch to tidy up mode as soon as you walk in the door, spend too much time ticking off what’s on the to do list while you’re there, and then switch back to tidy up mode when you’re about to leave.
That’s all before you’ve even factored in making sure that all your stuff is put away before those long-forgotten friends come and stay on their heavily subsidised holiday!
So why then do I still want to buy a holiday home?!
All-in-all when I look at the costs and hassle of buying, running and maintaining a holiday home, logic tells me that using the money to have a great holiday somewhere new each year makes much more sense. And ‘somewhere new’ can literally be anywhere.
So why do I still want to own a second home I can escape to? For those that know me, my family and I go to the same place in France every year in the summer. We have made good friends there and love spending our summer holidays with them.
Rental prices are expensive in that area though. It mentally hurts when I calculate how much of my hard-earned money I’m giving to some complete stranger each year. Thankfully we are fortunate enough to be able to stay at a friend’s house for some of our time there which does help, but still…
If we owned our own place, we would spend more time out there; Christmas and half-terms, not just summer holidays for example. The sheer cost of renting somewhere every time we go stops us from going as often as we like.
Some would say to hell with it! That now is the time to be buying a holiday home on the continent before the Brexit negotiations are finalised. I’m not so sure – Brexit and the freedom of movement issue seriously concerns me.
The reality check
Of course, whether or not I want to buy a second home in the UK or abroad is irrelevant. It all comes down to money! The saying “The only thing that is stopping me from being rich is money” springs to mind.
We have an intrinsic love of property in the UK which I doubt is going to change any time soon. All well and good if you’re wanting to buy or upgrade your main home, but why do we have this need to buy a second home when, for most people, the maths just doesn’t add up?
Surely it’s better to rent somewhere? It’s certainly cheaper and much less hassle.
What do you think? Is buying a holiday home really worth it, financially and/or emotionally? Let us know your thoughts either below or on Facebook.