Around 4.3 million people in the UK (or 6.7%) own a second home.
These come in various forms and serve different purposes.
But either way, homeowners sometimes decide – or need – to sell them.
We’ve answered the most common questions about selling a second home in this blog.
Read on for all the information you need.
Second homes in the UK
A property is classified as a second home if its owner has a separate primary residence.
It covers a range of different usages, including:
- Holiday homes
- Rented out homes
- Homes housing other family members
- Pied-à-terres (where would-be commuters stay during the week)
- Empty homes.
And more!
Reasons to sell second homes
1. You don’t use it
If you haven’t used it in a while and have no plans to use it again, owning a second home may seem unnecessary.
Perhaps it’s a holiday home somewhere you’re tired of visiting. Or the relative you housed in it has moved out.
2. You want money for something else
Second homes tie up equity. Selling one is a straightforward way to access this equity.
(Alternatively, you could remortgage to release equity.)
3. Maintenance and upkeep
There are costs to running a home.
Even in empty homes you must pay council tax and carry out general maintenance.
There’s always a chance unexpected threats may appear, too, such as house pests or even squatters.
And if you’re renting it out, there are landlord responsibilities and the possibility of tenants not paying rent.
4. Changes in tax rates
Selling a second home usually means that a Capital Gains Tax (CGT) payment is due.
When government legislation changes this tax rate, it can trigger a massive number of homeowners trying to sell before the change takes effect.
This is especially common when the tax rate goes up.
Speak to an accountant to help you calculate the amount due, if you’re struggling. You then have a couple of months to make the payment.
5. Time frames for selling second homes
Selling a second home can move faster than average if it’s empty.
This is because you’re a chain-free buyer, so you won’t be slowed down by other people. Completing everything within 3 months is possible.
Meanwhile, if your property still has tenants living in situ, then it’ll take longer than average. Typically, around 5 or 6 months.
Costs of selling a second home
Most of the costs of selling property remain the same, even with your second property.
One study found that the average price is £6,739. This includes::
- Conveyancing
- Estate agent commission
- Removal company.
The significant additional cost, in addition to the figure listed above, is for Capital Gains Tax. This is due to it being a second home.
You should consult with an accountant who can guide you through current tax rates and explain their implications.
Drawbacks of selling second homes
Loss of rental income
If you’re renting out your second property, then you’ll lose this income.
It could mean that your cash flow takes a hit in the long run.
Loss of future property value growth
The UK has an excellent track record of growing its property prices.
Your house will probably be worth more in a decade than it is today. By selling now, you won’t benefit from that growth.
Capital Gains Tax (CGT) becomes due
Selling immediately means that you’ll have a sizeable CGT bill.
Ensure you’re prepared to pay this, and it won’t interfere with your other obligations.
