Since the Brexit referendum in June 2016, resulting in the subsequent fall in the value of the pound, “staycation” holidays have been on the increase. Many holiday makers now wish to have more flexibility and are replacing the cost of flight fares to pay for accommodation in the UK. It is more convenient to jump in the car rather than being restricted to luggage allowances, flight times, as well as waiting hours in airport departure lounges to face probable flight delays, disruptions or cancellations. The staycation trend has led to an increase in demand for those looking to purchase a second home, in some cases causing competitive bidding on prime properties. This is one of the factors that has led to consistent house price growth in Cornwall, albeit at inflationary levels, over the last 3 years. The South West has bucked the trend compared to London and other areas in the UK, which have seen house prices reduce.
The holiday homebuyer not only looks at their property as an investment, potentially offering a better future rate of return with house price growth compared to their savings or pension fund, they can also choose to earn a yearly income by holiday letting. As opposed to long term letting, they have the enjoyment of staycationing at their property by owner booking the weeks during the year they wish to stay with their holiday letting company. Many also make last minute decisions for a cheeky weekend chillax if the property is not let.
Leeds Building Society is one of a growing number of UK lenders to offer specifically designed mortgages for properties used as holiday homes. The Leeds recently conducted a national survey reporting: “the most desirable holiday let property for staycationers is a cottage near the coast in The South West, (topping the polls at 25%), with Yorkshire and the Humber (16%), the North West (10%), North East (9%) and South East (6%) rounding out the top five”.
Notwithstanding the 3% Stamp Duty Land Tax surcharge and Capital Gains Tax, there are tax entitlements for holiday homes in the current regime, subject to the property being “available” to let for at least 210 days a year, and it is “actually” let by paying guests for at least 105 days, “Furnished Holiday Let” properties can be classified by HMRC as a business. Therefore, Furnished Holiday Let homeowners are currently able to deduct mortgage costs from the profits as well as subtract expenses such as utilities, maintenance, cleaning etc. Also, providing the property is “available” for holiday letting for 140 days per annum and is “actually” let for a minimum of 70 days a year, owners can apply to be business rated making the property exempt from Council Tax payments. There are other costs to pay such as bin waste removal, but most properties are “zero” rated.
Of course a strong number of our second home buyers choose not to holiday let since they travel down to our beautiful area as often as they can to de-stress and relax as a release from the humdrum and pace of day to day working and city life. With the expansion of Cornwall Airport, Newquay, particularly with the introduction of regular and daily all year round internal flights to London Heathrow, we have found many family second home owners are spending the school holidays with the children in Cornwall whilst the bread winner commutes during the week to work. These are also the reasons why we have seen an increase in lifestyle change buyers making the complete break from city life to move to the area permanently.
H Tiddy Independent Estate Agents has been established for over 100 years. We are based in the chic, picturesque and exclusive coastal village of St Mawes, Cornwall, an Area of Natural Outstanding Beauty. We are the leading agent in our niche market, where our local expertise and knowledge is paramount to our success. We are specialists in selling properties on The Roseland Peninsula and The Cornish Riviera, including the creeks and rivers on the Carrick Roads. We currently have a wide selection of properties ranging in price from £81,250 to £3,250,000. We strongly advise you register with us, since not all the properties we sell go on the “open market”.
By Mark Willson, Director, H Tiddy, St Mawes, Cornwall