A third of second home owners own less than a quarter of their home

A third of second home owners have mortgages of 75 per cent loan to value or higher, with a fifth owing more than 90 per cent on their home, according to a survey of holiday home owners conducted by holidaylettings.co.uk. Furthermore, three quarters paid more than £100,000 for their second home and 37 per cent have euro mortgages.

These figures tie in with nearly half (43 per cent) of the same survey respondents stating they let their home to paying guests ‘out of necessity to cover mortgage repayments and running costs’. Furthermore, the number of holiday home landlords entering the lettings marketplace has grown 84 per cent in the last 12 months when compared to the previous six.

The hard cash reality of owning a second home, whether in the UK or overseas has hit home in 2008. For example, a €200,000 interest only mortgage on a 6% deal will cost the home owner around €1,000 per month. Paying this via a currency transfer from pounds to euros would in 2007 have been at a rate of around 1.45 euros to the pound, equating to £690. Based on the current pound to euro exchange rate of around 1.2 it would cost £830 – a monthly increase of almost £140 expenditure.

Ross Elder, managing director of holidaylettings.co.uk comments: “It has been a tough year for any second home owner with a mortgage, which in part explains the growth in the number of owners letting out their properties in the first 10 months of the year. However, I believe there is also a transition of appreciation for the added value a second home has, not just as pension or capital gains income, but ongoing rental income.”

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