Holiday lets in UK hot spots
With more Britons taking UK holidays, having a second home to let can prove very profitable
Owning a second home in the UK might seem like the ultimate luxury, but this is one area of the market defying any downturn.
Figures from Knight Frank show demand for second homes is at a five-year high - rising by 2.6 per cent last year, with a further two per cent increase expected this year.
Reasons include the rise of the staycation as more of us holiday at home, and a desire to avoid airports, but according to Liam Bailey of Knight Frank there are pragmatic financial grounds, too.
"Potential investment returns from holiday lets is a huge draw," he says. "Increased demand for self-catering accommodation throughout the year has enabled buyers to look on a second home as an investment rather than a luxury."
Cornwall: stay close to water for a good return
A holiday home in Cornwall let for 32 weeks each year typically offers a rental yield of between six and seven per cent. For the strongest rentals, keep close to water.
"When it comes to second homes in the South-West, the nearer you are to a sailing estuary or a sandy surfing beach, the better," says Jonathan Cunliffe, of Savills. "That means villages like the ever-popular Rock on the north coast, and along the south coast from Fowey to Falmouth."
Cunliffe tips Polzeath for good value, where prices are up to a third cheaper than neighbouring Rock and where the low-quality housing stock is being replaced by slick new homes. Four buyers recently competed for a quarter-acre clifftop plot there with permission to build one house, which Savills sold for over the guide price of £675,000.
Pinewood is a cluster of 11 high-quality, four-and five-bedroom houses with Polzeath Beach at the end of the communal gardens. The two-acre site is within walking distance of three beaches and provides valuable parking spaces. Prices are between £595,000 and £975,000 through Savills (01872 243200).
Delights of rural Devon
Sandy beaches and market towns such as Totnes and Salcombe have made South Hams in South Devon a holiday home hot spot. Nearly one in 10 homes there are registered as second homes.
An 18th-century, Grade II-listed mill conversion on the River Dart in Staverton has eight two-and three-bedroom duplex apartments priced from £299,000 to £359,000 through joint agents Knight Frank and Stags. Staverton Mill is beside the steam railway line and 10 minutes from Totnes on a vintage train.
East Devon is two hours by car from London when the A303 is clear. "East Devon has become much more popular with second home owners from the South-East," says Hannah Edge, of Strutt & Parker.
"Resorts such as Sidmouth, Beer and Branscombe, once considered retirement areas, are easier to reach from London than South Hams and also more affordable. Forty weeks annual rental is possible for well-located property."
Strutt & Parker has new two-bedroom flats in Sidmouth from £275,000 and a modern conversion of a Grade II-listed milking parlour in Farringdon, 10 miles from Exeter and nine miles from Sidmouth, for £560,000. This three-bedroom house with large gardens is three miles from the M5 and surrounded by open countryside.
Off to bonnie Scotland
Well-located city pads offer strong rental possibilities as well as providing you with a holiday home. The HomeAway Holiday-Rentals website has seen the UK jump from the seventh most popular country for rental enquiries in 2008 to the fourth (behind France, Spain and the US), with London and Edinburgh in most demand.
Edinburgh attracts tourists year-round, with numbers peaking for Hogmanay and the summer festivals, but it has opportunities to rent to business people with its established financial sector. Yields are modest - typically four per cent - but lifestyle benefits are good, with the Highlands and islands just two hours away.
"Edinburgh is a cultured and beautiful city with an international airport and two train stations," says Steven Currie, of letting agent Murray & Currie. "Clients are doing their sums carefully, researching possible yields and considering costs. New Town and Stockbridge provide versatile short- and long-term lets with prices from under £300,000. "A property that rents long term for £1,000 a month could achieve £5,000 for August during the Festival."
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