Buying a second home has become an increasingly popular choice for UK homeowners and property investors.
A second house is technically any property that a homeowner decides to live in alongside their primary residence. Investing in a second home is often the go-to decision for those wanting to buy a holiday home, a place to stay in when travelling for work, or provide a residence for other family members. “Second homes” can also refer to investment properties, such as buy-to-let homes.
Recent data from Northwood suggests that the number of homeowners owning second properties has surged to 4.3 million in 2024, which is up 1 million from last year. As such, it’s clear that many homeowners in the UK see value in expanding their property portfolios, and with the right financial investment preparation and decisions, there’s every reason that it can reap lucrative and enriching rewards.
However, the crucial question must be asked: “Is investing in a second home the right choice for you?”
As RICS-accredited chartered surveyors with experience in property assessments nationwide, we recognise the factors that many homeowners consider when weighing the potential rewards and risks of investing in a second home.
Here are several compelling reasons why investing in a second home might be worth considering, along with essential guidance on how to protect your investment.
Property has historically been one of the most reliable long-term investments in the UK. Despite occasional market fluctuations, UK house prices have shown remarkable resilience and growth over time.
According to Nationwide Building Society data, average house prices have risen from approximately £156,000 in 2005 to over £265,000 by the fourth quarter of 2024. Therefore, many homeowners take confidence from this trend, although individual outcomes may vary depending on location and market conditions.
When considering a second property investment, location remains a vital deciding factor. Some local councils offer to charge less council tax on second homes, depending on the area. Value growth in certain areas does extend beyond the property itself, which is worth bearing in mind if you’re in a location with the potential for high demand.
The UK rental market remains robust in many areas, with demand often outstripping supply. Since you cannot live in both your primary and secondary homes at once, many opt to rent out their second homes to earn additional rental income.
A second property can provide a steady stream of passive income, potentially offsetting mortgage payments and other ownership costs. You can choose to let out your property for a long-term rental or a short-term rental, which may be better suited for homeowners in tourist-heavy areas.
According to recent surveys, such as the ONS 2018/2019 survey, approximately 39% of second homeowners in the UK purchase properties as holiday homes or weekend getaways, while 35% of properties were bought as long-term investments. This means that homeowners have the option of ready-made accommodation for when they embark on solo or family holidays, without the initial overheads and expenditure of finding temporary accommodation.
Furthermore, as you mainly reside in your primary home, you could even extend your second home as a vacation rental, earning valuable income during peak tourism and travel seasons. When you want to use it yourself, you can then ensure it’s vacant before your arrival.
Diversifying investments across different asset classes is a fundamental principle of sound financial planning. Real estate can provide a tangible asset that often moves independently of stock markets and other investment vehicles.
Buying a second home can be an excellent, fulfilling way to diversify your investments across two properties, thus not putting all of your eggs in one basket. Knowing that you have a second house to fall back on in case one housing market dips can provide valuable peace of mind.
In the UK, owning a second home can be a tax-efficient investment. Not only can it lower your overall taxable income, but depreciation and interest expenses may be deductible if the property is used as your principal residence. Portions of the income from the second property may also be exempt from your taxable income.
Certain capital gains rules may apply when selling a second home. It’s recommended to consult a qualified tax advisor to understand what exemptions or liabilities might apply to your circumstances.
While there are clear benefits to buying a second home, homeowners considering expanding their portfolios must be aware of the potential challenges ahead.
In the UK, you often pay more than the original purchase price when buying a second home. You must also pay a higher rate of stamp duty, not to mention the additional legal and tax expenses. Buying a second home may, at first glance, appear more expensive, but while the upfront costs may be high, the long-term appreciation can make the investment fully worthwhile.
It’s also worth knowing the potential resale taxes that you could be subjected to before you decide to sell your second home. Not only must you pay CGT on the profits when you sell a property that isn’t your primary home, which may differ from the flat rate and rise over time. Therefore, if you plan to sell your second home within a few years of purchasing it, expect to give HMRC a portion of the profits.
Furthermore, certain areas have the dichotomy of dwindling tenant demand and a surplus of rental properties on the market. Finding tenants can be difficult, and investing in a second home to let to tenants can be a risky move, as there is every chance it could go months without being lived in, thus affecting your income.
You’ll also be responsible for the necessary upkeep, maintenance, and repairs of your second home, and if you don’t live close to the property, this can be challenging.
Before committing to any property purchase, a thorough professional survey is essential. At Cosey Homes, our team of RICS-accredited surveyors provides expert assessment services nationwide, from Newcastle to Portsmouth. We understand that second-home investment decisions require robust information about a property’s condition, potential issues, and true market value.
Our RICS Level 1 Condition Reports can provide a basic overview of recently built properties, while our more detailed surveys are recommended for older homes that may require adaptation for specific family requirements.
Our RICS Level 2 Homebuyers Surveys can help identify properties in areas with strong growth potential, ensuring you make an informed decision based on both the property’s current condition and its location’s possible market performance.
Our Level 3 Building Surveys are particularly valuable for older properties or those requiring renovation before letting, as they provide comprehensive assessments of structural integrity and highlight potential issues that could affect rental viability.
Whether you’re considering a modern apartment as a city investment or a period cottage as a countryside retreat, our comprehensive survey reports can help you make informed decisions and potentially save thousands in unexpected repair costs. For a free instant survey quote tailored to your exact needs, contact our dedicated customer service team today.
You can request a RICS Homebuyers Survey quote by completing a simple form.
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