Holiday home or extra money for vacations?

[DelightfulDilemma]

I know this is a travel forum but looking for opinions!

I have some cash to invest arising from a small inheritance. We truly don’t need this cash for anything else. We have a teen and a 7 year old. DH and I have busy careers but we usually manage a two-week holiday in Europe each year and a smaller UK holiday or visiting relatives in Europe once or twice a year of year. I do definitely want to do some big trips before my teen departs for uni so I have only a handful of years to take her to Japan and Costa Rica and New York etc.

However; dh really wants to buy a property on the south coast and has found the perfect property in our budget. It’s also accessible so my dpil could stay there whenever they like (he loves that idea). It’s within a few hours drive and he has memories of whole glorious summers with his family and cousins at the beach (who lived there). Both my dc LOVE the beach and love the idea of spending time there and dd has visions of living there in the summers during uni with friends whilst working and sunbathing and generally “living the life”. Dh and I can both wfh and so until DD steals our holiday home it is no problem to be on the south coast for four or five weeks in summer holidays, or take long weekends.

But I would still want my big holidays - I don’t want to miss out on travel and dh says that’s fine too.

However I worked out the cost of running the property would be £6k pa. And it will be £12k stamp duty and cost of furniture and unlikely to see much capital growth. So we are looking at “losing” £20k in year 1 and £6k each year subsequently.

Would you rather spend that cash on fabulous trips, or sink it into a property that gives you a relaxed beach lifestyle and an opportunity to let friends and family have lovely long weekends at the beach when we are not there?

I cannot decide!

We decided not to buy.

friends and family using it for free is a hassle.

yes, your teens will enjoy it and spend time there. But we certainly felt that our family life was so busy and full anyway that we wouldn’t do weekend (music rehearsals, sports games and concerts) and so we chose travel and a bigger house instead.

Maybe that wasn’t clear: what I mean is I’d have a HUGE budget for fabulous trips if we didn’t buy the holiday home of my DH’s dreams. But I’d probably feel obliged to trim the travel budget if we were also spending cash on the holiday home - we are not made of money.

Probably important to add - our family home is mortgage free, and dh is going to spend an extra £25k upgrading his car next year, which I agreed to. This means over the course of our marriage he will have spent £30k more on cars than me (his depreciate; I buy older cheap cars that don’t lose value so rapidly). I’m not measuring but the point is he has always been more spendy than me and doesn’t think twice about having an empty house costing money! Whereas I feel a bit ethically icky about it.

No. I would use the money for holidays rather than holiday home.

This is a great point. Dc has a Saturday sport i had totally forgotten about which runs through the whole year and is likely to get competitive in the next couple of years with lots of road trips for regions comps. Argh

A second property just means twice as much admin and maintenance.
It sounds like the main financial winners from this property would be PILs. Instead I would suggest to DH treating them to a UK break in that location once a year with you all.

Also @Octavia64 maybe I need to consider why it would be a hassle letting friends and family stay. In my head, there will be a key-safe so they can easily get in and out; and they will treat my property with respect. What could possibly go wrong?

Yes I said this - we’ve been sitting on this cash now for two years and it hasn’t happened. I can’t work out if that is simply because PiL don’t want to do it, or if dh is holding out hoping I’ll buy the HH (holiday home)

You also have to pay double council tax on a second home (unless you are running it as a business which is a huge hassle). Then there are the cost of repairs etc. (What if the boiler goes in both properties?)
And how often will someone be there throughout the year? If it’s left unvisited for more than a month it is risky and might invalidate insurance…

Not in your league but we had a static caravan in a beautiful area and it was the perfect escape. We replicated home from home so didn't have to take anything apart from food and still had holidays abroad. It was wonderful to have a different place to get to know, a second home. It wasn't stressful at all, just paid the fees and rocked up. However after a certain amount of time you may find you go less, at which point we gave it up.

No, no, no to a holiday home It will just be a money pit, even more so in the current political climate. Even with a change in government extra taxes are much slower to come down again than they are to go up in the first place.

@MollyButton the double council tax is factored into my budget. I’ve no objection to paying it and I wouldn’t seek to avoid it- we are the bad guys taking a property someone local could otherwise live in.

The insurance is an important point. Definitely needs to be considered as there could be times (Feb/Mar) we wouldn’t want to visit.

So I know of two situations where there is this kind of set up.

in one, it was the parents holiday home and when they died the ownership was split between the tree children (by that point the children were in their fifties).

all of the children had children and everyone wanted it during the summer holidays and at May half term /easter.

yes lockbox, but it’s also stuff like if you are not going to have a cleaning agency come in in between people then each group needs to clean thoroughly and that means a tick list and checking it up.

inevitably someone doesn’t clean to someone else’s standards and there’s a row because a and b went there expecting it to be clean and it was dirty.

also, houses require maintenance. Depending on what you buy and how much needs doing you might find a lot of the time you spend there is spent repainting or fixing leaks or dealing with the dishwasher not working.

if you own it and family are just borrowing it then they’ll contact you if something stops working. You’ll need details for plumber etc down there.

i know families that have made it work and do enjoy it but don’t underestimate the hassle.

@TonTonMacoute I hear you. I’ve hemmed and hawed on this for a few years but I’m under pressure to make a decision. My dh says, we’ve paid the mortgage, planned our savings, we are buying the fancy car - the remaining money is just sitting there devaluing.

I am not good at investing and property used to seem sensible… it seems less sensible having a mostly-empty flat in an area that doubles your council tax!

My parents came from literally nothing. So I don’t want to fritter the money away.

Does the £12k Land Tax cost include the 5% surcharge?

@Chasbots what is this 5% surcharge you speak of? 😂😂😂 no I don’t think I’ve factored that in.

And given all the rest of your choices, I'd talk to a Certified Financial Planner for advice on investing, probably in a very diversified portfolio. Rent the house in the place you want to go...

As someone who is now very aware of care home fees, I'd be investing but if your DH really wants his house, then....

It's a 2nd house to the one you own, there is a surcharge.

We had a holiday home but it was abroad. Great for a while but we missed going to different places so sold it after a few years. You would have to pay CGT if you wanted to sell at some point which would be a good chunk of your cash going to the tax man.

I used to have a holiday property.

OK for the first few years - apart from trusted family members causing damage & denying it so refusing to pay when they'd had a free holiday !!

Expenses are always more than you expect - insurance is huge.

You really need someone or an agency to look after it during your absences.

You'll feel obliged to holiday there rather going elsewhere.

A lot of problems too numerous to mention, but it was a relief when I sold it.
Apart from the CGT !

@Octavia64 are family that rude? I’d just roll up my sleeves and clean it if Aunty A had left it in a mess.

My DH’s aunt had a property in exactly the circumstances you describe and when we stayed there we left it spotless, and would leave a bottle of champagne in the fridge for the next family to enjoy. Always!

We considered a holiday home, until my husband pointed out that we'd therefore have to have most/all of our holidays there. And I knew I'd miss the variety of being able to go to new and different places every year.
Add that to the hassle of maintaining another property.....
So we didn't buy and, in the 20+ years since, we haven't regretted it.

If you want to buy a holiday home, the first step is to spend more time on the South Coast and work out where you want to buy and actually have the holiday with the PIL. Also a bit of a test to find out how committed the rest of the family are. It's easy to spend somebody else's money if you don't envisage having any responsibility.

This thread is really just an echo chamber for my own thoughts. I just want the freedom to travel and not fret constantly about whether I’m accidentally losing money on “the money pit” as someone called it up-thread!

I would hate it to create tension and upset with friends or family. I did already ask dh if we’d let his db stay there with his two dogs and he said “we’d probably have to say no” but that’s crazy - a beach house near a dog-friendly beach, and he won’t let his db use it? Or we’d say yes and the dogs would stink the place out (I love dogs, I do, but these too are whiffy oily barky rescue dogs who make it very hard to love them!)

We recently sold ours because basically it was a money pit and just meant we had two places to maintain and clean.
Also, although we said it wouldn’t, it did stop us travelling to other places as much as we would have.
The best thing for me now though is to stay in hotel and just leave to come home without cleaning up first / changing the beds etc!
Plus when you do sell you get clobbered by CGT if the value has increased.

@southcoastholidays we do know where we want to be, and has these family associations for my dh who lived there for many years. I do worry he only wants this for some nostalgic reason - recreating for our kids those halcyon days of his own youth when he lived the beach life with his cousins. And so his pil can also spend time remembering those wonderful years. It’s such a lovely dream, it’s hard not to get caught up in it.