Home insurance - Tips & Advice - Second homes
Direct Line’s second home report and recent reports from the Office of the Deputy Prime Minister (OPDM) show that owning more than one property is no longer a pipe dream for many UK residents. The reports show that in 2005 nearly 500,000 of us owned a second home in the UK or abroad, with figures rising every year. So how could investing in a second home benefit you?
A place in the sun
One of the most popular reasons for buying another property is to use it as a holiday home. Of the 300,000 second homes bought in the UK, the ODPM’s survey shows that 80,000 of them are located in Devon or Cornwall – a popular holiday destination on home shores. Of the 180,000 second homes bought abroad, holiday homes in Spain and France remain the perennial favourites, although 41,000 are now located outside of Europe – 9,000 of them in the US. Hot new destinations such as Croatia, Montenegro, Slovenia and Bulgaria have also seen a rise in second home purchases – partly due to new budget airline routes – and are tipped as ‘places to buy’ by experts such as A Place In The Sun presenter Amanda Lamb.
What most well-bought holiday homes have in common is their well-loved location (maybe somewhere you’ve already been coming back to for years) and their ease of accessibility or proximity to home – if you want to take regular breaks there, more than three or four hours travelling can really drag the experience down. Plus, buying in a place that you’re half-baked about may mean you pay out for a place that ends up not being used. To make sure you make the wisest move and don’t get caught out by the local lingo or laws, check out sites such as www.channel4.com or www.buyassociation.co.uk. These offer a range of helpful advice including destination and buying guides.
A home investment
It may be that you view buying a second home as a way to make money and there are two ways of looking at making a return on your investment. Either you develop a strategically bought second property and make a profit when you sell. Or you could buy-to-let, which means you rent out your property to tenants so that your mortgage is covered and it pays for itself. Direct Line for Business could give you the right landlord / buy-to-let cover at a competitive price. Call 0845 604 2292 to find out more or get an online quote. Your holiday home could also incorporate some kind of money-spinning element so you use it for pleasure, rent it out to others for part of the year, and sell when the market looks right.
Direct Line is currently unable to insure properties purchased for the sole purpose of renovation and on-sell or holiday homes.
Assessing the extra costs
In all cases just remember that a second mortgage is not the only cost you will have to think about. For any property you buy you’ll have additional expenses such as utility bills, maintenance and council tax (unless you are there for less than three months). If you rent out any rooms in your second home, you could also end up paying tax on rent acquired over a certain amount. You also need to think about the money it costs to travel to your second home, especially if you are using it as a holiday home.
Last but not least, you need to make sure your second home is protected against emergencies by taking out second home insurance. You can purchase Direct Line Buildings and Contents Insurance for second homes in the UK if you call us.
For more details of benefits and terms and conditions, read our home insurance policy documents.
We also have a range of Direct Line Mortgages that could suit you.
If you’re looking to take out a new home insurance policy, Direct Line offers a good deal better. Why not get a quote now and see if you could save.
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