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Savvy Brits Ensure Holiday Homes Work Financially

14th September 2005 | back to article listings BACK    print this article PRINT

60% buy homes abroad for rental income

Today’s investment-savvy holiday home purchasers rank rental income as the primary purpose of a holiday home abroad according to new research from property investment specialist Assetz. A staggering 60% of those 50,000 investors and non-investors surveyed cited rental income as the most important factor when buying overseas, with a further 21% claiming a home for their retirement was their top priority, followed by just 19% who wanted to use the property purely as a holiday home.

Letting international holiday homes is a relatively new trend that has only taken off significantly in the last three years. Previously there was a certain amount of stigma attached to renting a holiday home out on the open market, but today’s financially aware purchasers are more likely to be embarrassed by failing to make their investment work for them.

Making a success of holiday lets has meant the second homes market is booming, no longer the premise of an exceptionally wealthy minority who can afford to own a second property outright or cover the mortgage from another source. The investment angle is becoming more important to British holiday homeowners as a significant proportion of their household assets may be tied up in the purchase. By renting out their properties for part of the year, those on more moderate incomes have been able to access the second home market, generating enough revenue to cover the mortgage whilst enjoying holidays when it suits them.

The majority of those surveyed, 54%, would spend under one month in the property throughout the year, demonstrating the commitment of purchasers to protecting high rental yields.

Stuart Law, Managing Director of Assetz comments:

“There is a tremendous benefit in being able to own a second property, use it for holidays, enjoy capital gains in most overseas hotspots and also generate an additional income in return. The second home revolution means it is no longer the domain of the rich, but also of the financially savvy who make sure their investments stack up.

“I also think there has been a move away from investors letting property cheaply to friends and family, as there’s a growing realisation that it can have a major impact on returns, especially in high season.”

In countries such as France where the minimum deposit is only 15% compared to 30% or even 50% in other overseas destinations, it is possible to buy property with a minimal initial cash outlay. As long as the rental income covers the mortgage, which can be guaranteed with the French leaseback scheme, a second home in France can be a viable option for many people.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/2206.html. Alternatively, please see our full press release archive.

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