Buy to Let
2.4 million Brits own a second UK property
Second home buyers haven’t been put off by the three per cent stamp duty surcharge or other tax grabs
The number of people owning a second property rose sharply, from 1.81 million to 2.44 million in the 10 years to 2018/19, according to analysis of the government’s English Housing Survey by Hargreaves Lansdown.
The investment platform said that in 2018/19 there were 3.75 million second properties, up from 2.68 million a decade earlier.
The number of these that are lived in by someone else is up around 40% in that time to 2.67 million. The number that are second homes is up around 30% to 873,000.
However, in 2018/19, only 35% of second property owners thought of it as a long-term investment, compared to 48% five years ago.
The most common reason for owning a second property is still as a holiday home – at 39%. However, this is down from 50% a decade earlier.
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Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The second home dream is alive and well. Despite rising prices, more than a million have been snapped up in the past decade alone. But most people aren’t planning a strategic property portfolio to make their millions, many have either realised their dream of owning a holiday home, or stumbled into becoming accidental landlords.
“When asked why they had a second home, more people said they wanted it as a holiday home than said they saw it as a long-term investment. The proportion who claimed to be investing has dropped 5 percentage points in a decade – and is down 13 percentage points from a spike in 2013/14. This may have something to do with the fact that this period saw sluggish property price rises, so owners were aware it might not make their fortune.”
Hargreaves Lansdown also pointed to the fact that the government has tried to deter people from buying second homes by making it less tax efficient. Since 2016 there has been extra stamp duty to pay when you buy, and since 2017 the rules on offsetting mortgage interest against tax on rental income have made this far less attractive too.
Coles explained: “It means you’re taxed on the way in, as you go along, and when you sell, so it’s one of the least tax-efficient ways to invest. When you compare it to ISAs, which are completely tax free, the tax burden is enormous.”