Forget Spain, buy British

Forget Spain, buy British
Last Updated: 12:01am BST 01/05/2007Page 1 of 3

Why purchase a holiday home abroad when Britain's weather and house prices are both improving? Zoe Dare Hall explains how fears over flying, environmental worries and new warnings about a property crash in Spain are invigorating the UK's second-home market

In pictures: Second homes for sale
After an unusually warm Easter that probably made those who flew abroad in search of sun wish they hadn't bothered, we are now set for the ninth summer in a row with above average temperatures.

Northern sun: Plockton, on Loch Carron, western Scotland, where a two-up two-down croft offered at £325,000 recently sold for nearly £500,000
The signs of climate change are giving us more reason than ever to indulge in our favourite topic of conversation: the weather. Combined with a growing reluctance to fly, fuelled by air taxes, concern about pollution and the threat of terrorism, we are starting to think twice about heading overseas for our holidays and our holiday homes. Last week's warning bells in the Spanish property market, where an oversupply of homes and fewer buyers has lead to predictions of a collapse in prices, will make us think harder still.

New research by Savills shows that the number of second homes in England, of which half are holiday homes, increased by 2 per cent last year to 350,000. Indeed 1.5 per cent of all homes in the UK are now second homes. And while London and the ever-popular South West account for 42 per cent of second homes, areas in the North are emerging as holiday home hotspots.

Berwick-on-Tweed in Northumberland has the highest percentage of second home ownership of the new northern hotspots at 9.2 per cent, putting it almost on a par with north Cornwall, and prices have increased by 115 per cent since 2001.

"Until five years ago, Northumberland was one of the most beautiful but overlooked regions, only really known by holiday home owners from Newcastle, but now it's attracting a wider clientele," comments Tim Hawes of estate agency Strutt & Parker.

advertisement
"A two-bedroom holiday cottage or barn conversion in the best areas on the Bamburgh coast will cost from £300,000 and can rent out for £1,000 a week for 30 to 35 weeks a year."

Copeland in Cumbria has seen even higher growth: 126 per cent in the past five years. Savills's research also points to the Yorkshire seaside town of Scarborough, where property prices have risen by 113 per cent, and Richmondshire in the Yorkshire Dales, with rises of 112 per cent over the same period. Further south, the second home hotspots, says Savills, are north Norfolk, the Suffolk coast and the Cotswolds.

"The areas pinpointed are strong tourist areas and those in the North show the highest level of house price growth in the region," says Savills director Lucian Cook.

With warmer temperatures comes the renaissance of the British seaside, which struggled from the mid-1970s to mid-1990s to compete with the cheap package deals and guaranteed sun offered by overseas destinations.

Hastings, in East Sussex, was typical of the slump, earning the nickname the "Costa del Dole" as its seafront B&Bs switched from accommodating holidaying families to housing DSS tenants.

But in the past 10 years, Britain's coastal towns have experienced some of the highest price rises.

"Weymouth and Brighton show very high growth and the Welsh coast outperforms the rest of Wales," says Lucian, who also cites Margate, Broadstairs, Ramsgate, Folkestone, Hythe, Southend and Clacton as other "value growth hotspots". "There are strong preferences for waterside properties in these coastal areas," he adds.

Martin Levinson, a property developer who recently moved from London to a rapidly regenerating Hastings, reports clear signs of the tide turning.

"There is a definite shift in interest towards buying a holiday home in English coastal towns rather than abroad. People are getting badly bruised from buying holiday homes overseas, where they have little protection, and they are fed up with airport delays."

The East Sussex resort's town centre has planning permission for a business and leisure district. Property prices are rising as Londoners, in particular, latch on to the appeal of having a beachside bolthole within a two-hour drive of their main home.

"New penthouses with sea views are on sale for £240,000, which sets a new benchmark for Hastings," says Martin, "but you can still pick up one-bedroom flats overlooking the sea from £120,000, which can earn £300 a week in short lets, or three-bedroom houses in the old town, which has more cachet than the seafront, from £200,000, and you can rent them for £600 a week to holidaymakers."

It was the seafront setting that attracted Gaynor Moynihan and her family; her husband, Lord Moynihan, is chairman of the British Olympic Association, and they have three children - Nicholas, 12, George, 11 and India, 9. They bought a three-bedroom Regency Cottage in Sandgate, near Folkestone, Kent.

"Ten years ago, we looked all over the usual places for a holiday home - Hampshire, Wiltshire - but then we saw this and just knew immediately. It's right beside a pebble beach, which is far more interesting than sand. I have wonderful memories of going crabbing with the children and you can throw a line and get sea bass," says Lady Moynihan, who spends "every available moment" at the Grade II listed house, built as a military commander's residence during the Napoleonic Wars.

advertisement
"It's very easy to get to - less than an hour from our main home in Sevenoaks and an hour and a half from our flat in London. But once you get there, it really feels like you are on holiday and in summer it feels like the Mediterranean," she says.

"You can see Calais on a clear day and there is fantastic light throughout the house, which has the original high ceilings and wide doorways," says Lady Moynihan, who is now selling the house through Knight Frank (www.knightfrank.com, 01892 515 035) for £1.25 million because they have bought a larger family home near Tunbridge Wells.

Peter Holden, UK and International Investment manager for investment advisers Assetz (www.assetz.co.uk/investors, 0845 400 9000), who have identified a number of UK holiday hotspots, says: "As the climate improves, the UK holiday homes market is certainly one that is going to grow over the next few years."

Peter highlights the rental potential of homes in the Lake District and Scotland, where year-round demand comes from ramblers, horse-riders and other outdoor enthusiasts not dependent on good weather or beaches.

"Pretty much anywhere in the Cotswolds will also have good rental returns as it's such as strong weekend destination," he says.

A burgeoning hotspot, he adds, is Filey, the North Yorkshire seaside town, which is undergoing a £120 million upgrade of its infrastructure. Hotels, restaurants and sports facilities are being built on the site of a former Butlins holiday camp.

Assetz is marketing a village of holiday apartments and houses on the site from £125,000. They are hoping to attract buyers from Tyne Tees, Yorkshire and the north Midlands who don't want to drive to Devon or Cornwall.

"People want somewhere nearby to save them the stress and cost of flying a family abroad at short notice," says Peter Holden. "As long as people can get 20 to 25 weeks' rent to cover the mortgage, they have a solid, long-term investment with a UK holiday home that they can benefit from by using themselves."

There are other financial benefits. "As long as your property is let for at least 70 days a year and available for 140 days, it is classified as a commercial property with capital gains tax of 10 per cent," he says. "Holiday home mortgages have changed significantly in the last 12 months too, with up to 90 per cent loan to value with interest-only repayments available and with residential mortgage rates that can be lower than buy-to-let."

On the down side, holiday home owners are now liable for higher council tax since the Government allowed local authorities to reduce the 50 per cent discount for second homes to 10 per cent.

John Coleman from Knight Frank in Edinburgh has spotted a UK holiday home niche, in what he calls "the consciousness market". "We think that's a sector that will grow over the next year or two, with people thinking that if they're going to have a second home, they want it to be carbon neutral."

Those seeking more traditional properties head to fishing villages on the East Neuk of Fife such as Elie, an hour's drive from Glasgow or Edinburgh, where a quayside house can cost £800,000.

English buyers in Scotland, however, tend to prefer "far-flung, get-away-from-it-all" properties, says Stephanie Watson of Strutt and Parker (www.struttandparker.com, 020 7629 7282).

"Crofts are like gold dust and get snapped up instantly. We have just sold a little, waterfront two-up, two-down croft with a mooring in Plockton, asking for offers over £325,000, which was already high. It sold for just under £500,000."

Scotland also appeals to the international "super-rich", says John Coleman. They are looking for trophy properties such as entire islands or interesting properties such as the 16th century Forter Castle in Glenisla, on sale for £1.5 million. "Ninety per cent of these properties are for second homes," he says. "Then, when you have to lock up and go, you can't get a more secure holiday home than a fortified tower."