I would rather cut off my arm than sell Crabshell,” Steve Smith says of his
holiday home in Kingsbridge, south Devon. One glance at his three-bedroom
second-floor flat and you can see why: directly on the waterfront, 5
Crabshell Quay has airy, light-filled rooms, floor-to-ceiling windows that
look straight out over the Kingsbridge estuary and sandy beaches within a
short walk.
Steve, 48, and his wife, Susan, 47, spotted the £400,000 property in 2004,
while it was still being built, during a drive around the area. They put
down a deposit on the same day. Since then, they and their three teenage
children, together with extended family and friends, have thoroughly enjoyed
their little piece of Devon heaven.
“We’d always said it would be our bolt hole and had no intention of renting it
out,” says Steve, a self-employed accountant who lives in Epsom, Surrey.
That was before the recession. Now, with their investment portfolio in poor
health, the couple plan to let out their holiday home for part of the year.
“At first, I didn’t like the idea of letting it at all,” Steve says. “Then,
after we had the first set of people in before Christmas, with no problems,
I felt better about it.” The couple now have bookings for half-term and
Easter, as well as two for May and August. (Crabshell, which sleeps six, is
available from £407 a week, rising to £1,065 in peak season;
www.toadhallcottages.co.uk).
Paul Johnston, 52, and his wife, Julia, 45, did not set out to be landlords
when they bought a flat near Boscombe Pier, in Bournemouth, an hour’s drive
from their home in Basingstoke, Hampshire. “We love the area, and my husband
and 16-year-old son, Guy, are keen body-boarders and surfers, so we were
thrilled when we found a flat just 500 yards from the sea,” says Julia, 45,
who also has an 18-year-old daughter, Laura.
Their plans changed in November, when they had owned the flat for less than a
year. Paul, 52, a credit-risk manager, lost his job and Julia’s work as a
freelance human-resources consultant began to dry up.
“We went from being a fairly comfortable two-income family to a no-income
family,” Julia says. “It’s been difficult. There’s no way we want to sell
the flat – and we’d lose money on it if we did – so we’ve had to offer it as
a holiday let to pay the mortgage and the bills. We’ll give ourselves six
months and see how we do.” The two-bedroom flat is available for rent from
£300 to £570 a week (holidaylettings.co.uk).
Both couples are among the tens of thousands of people who bought second homes
during the long property boom that began in the mid1990s (which, according
to Savills, pushed ownership in England up from an estimated 200,000 in 1996
to more than 240,000 a decade later). It seemed a no-brainer: not only were
they acquiring a bolt hole for long weekends and summer breaks, they were
making money in the process. Every visit to the cute cottage or seaside flat
was all the sweeter when they totted up how much its value had increased
since their last time there.
In the current climate, such properties are rapidly turning into an expensive
indulgence many can no longer afford. The most obvious solution is to sell,
but this can be painful – and not just for sentimental reasons.
As second homes are essentially discretionary purchases, their prices have
been particularly hard hit by the down-turn, especially in those areas
heavily reliant on City bonus money – as Jonathan Simm, 43, an accountant
from Hampshire, has found to his cost. He and his wife, Jan, were looking to
sell Mewstone, their four-bedroom townhouse in the middle of Salcombe, south
Devon, but have taken it off the market because they are unlikely to get the
£700,000 they want.
“We bought it in 2006, and love it, but we’re not using it much now our son is
at school on Saturday mornings, and it’s a 3½hour drive from our home near
Winchester, in Hampshire,” Jonathan says. “We’ll have to hold on to it until
prices improve and try to earn enough rental to cover the mortgage.” The
Simms have blocked off a week in August for themselves, but have made it
available for the rest of the time through Salcombe Holiday Homes (from £445
to £1,150 per week; sleeps eight; salcombe.com).
Their experience is typical. William Morrison, a partner with Knight Frank,
based in the estate agency’s Exeter office, says demand for second homes has
dropped across the whole country over the past 12-18 months. “These
properties are a luxury and an investment, both of which have suffered,” he
says. “There are still people wanting that perfect holiday home, but they’re
waiting for the bottom of the market. My advice to buyers would be to take
advantage of the situation and get the best you can for your money –
something next to the water or in one of the better villages.”
In the Yorkshire Dales, Patrick McCutcheon, director of the Dacre Son &
Hartley agency in Ilkley, which sells a high percentage of second homes,
says sales are down 60% year on year. Since the new year, however, things
have been looking better: “We are finding buyers who’ve inherited wealth or
have sold their businesses.”
All of which means that, in the meantime, short-term rentals are booming.
According to Holidaylettings.co.uk, the number of properties in England on
its books jumped 77% from 1,500 in January 2008 to 2,650 by the end of
December. It’s a similar story across the country, says Kate Stinchcombe, of
Holiday Lettings, which has done the number-crunching. “In a survey of more
than 3,000 owners in October, 43% said they had entered the lettings
marketplace out of necessity, to cover costs including mortgage, taxes and
maintenance. This compares to 30% who stated the same in the survey that we
did in December 2007.”
Both Stinchombe’s company and its rival Holiday Rentals (holiday-rentals.
co.uk) concentrate on traditional short-term lets, but some local agencies
are coming up with more innovative approaches. In East Anglia, Norfolk
Country Cottages has devised a Flexilets scheme that offers properties for
rent for between two and five months, to help owners fill them during the
quieter winter months. “This is for people between homes, working in the
region for a short period, even those wanting a longer holiday,” says James
Ellis, the company’s marketing director. “This bridges the gap between one-
or two-week holidays and long-term tenancies, for which most agencies insist
on a six-month minimum contract.”
How to make that holiday bolt hole pay its way
— Prioritise getting the high-value weeks booked, and be prepared to do deals.
In case you hadn’t noticed, there is a recession on, which means people will
have less money to spend on holidays. You are also competing with a growing
number of owners.
— Market your property to specific groups. “The romantic-breaks offer is
a good year-round one for smaller properties,” says Sylvia Blomeley, senior
property consultant at Toad Hall Cottages. “People want detached cottages
somewhere pretty, where there are good walks or views.” An open fire will
add to the appeal, as will a large hot tub if you can squeeze one in.
— Invest in contemporary furnishings: there is no shortage of discounts
at stores right now. Choose wipe-down leather sofas or designs with
removable covers, such as those at Ikea.
— Listen to the letting agents’ advice: if they tell you to put in a
flatscreen television, then do so. In a tough market, such details can be
all-important. The more expensive the property, the more holidaymakers will
expect the latest high-tech equipment.
— Read up on tax law. Revenue & Customs treats holiday lets more
favourably than ordinary buy-to-lets – and even allows you to offset any
loss you make against your income as a whole. At the same time, you must
follow certain rules: the property must be furnished, available for a
minimum of 140 days and actually let out for at least 70 of them at a market
rent (which means no mates’ rates). They can be let for longer-term occupation
(more than 31 consecutive days), but not for more than 155 days a year.
Confused? Go to www.hmrc.gov.uk and
search for “holiday lettings”, or consult an accountant.
NICE LITTLE EARNERS
Second homes – or holiday lets – for less than £500,000
Cornwall £495,000
Mariners is a restored Victorian house with views over the fishing village of
Mevagissey. Yachting and fishing opportunities are close to hand, and there
are several unspoilt swimming beaches nearby. It is used as a holiday let,
fetching £700-£1,400 per week. Knight Frank Waterfront; 01392
423111, knightfrank.co.uk/waterfront
East Sussex £369,950
On the high street of the historic town of Battle, Old Church House could be
let out for £800 a week in high season. The Grade II-listed house has four
bedrooms, four receptions, a terrace and views across the abbey walls. It’s
convenient for walks over the South Downs; Brighton is an hour’s drive away.
Freeman Forman; 01424 773888, freemanforman.co.uk
North Yorkshire £250,000
In the village of Ampleforth, 20 miles from York, two-bedroom Spring Cottage
sits in the Howardian Hills, in an Area of Outstanding Natural Beauty and
great walking country. With a large garden and an outbuilding that could be
converted into further bedrooms, it could be let for up to £350 a week.
Savills; 01904 617820, savills.co.uk
