How do people buy a second home?

[summerbreezingin]

Hi

I am wondering with real interest how people afford to buy second properties/holiday homes?

We are both in our early 30s, earning good money with no dependents. We would love to purchase a second home. I work in social housing so would want this to be rented out at an affordable rent level.

My question is, just how do people do it? We have stayed in a number of AirBNBs over the years which are owned by people very similar age to us, and I wonder just how they do it?

Ultimately, all I have to say is, great, be a landlord. Good for you, you are providing someone's home.

If you buy a second home in a desirable area, that serves no other purpose than to make from money from inflation, or it's empty apart from just 6 weeks of the year when you want a holiday- You're a wanker. There's a housing crisis.

Leaving this thread 👍

My husband has bought a couple with buy-to-let mortgages as well as a second home for us to stay in, in another part of the country (we live on outskirts of London). They've all increased in value so, if sold, a profit would be made. At the moment they are let which provides income.

Our own second home is really nice but it is an apartment, not a house, so we've no garden or upkeep of the external building to worry about. It's a second floor flat with Juliet balconies front and back, long sitting room, en suite shower room and 'family' bathroom, two bedrooms and decent sized kitchen. Quite modern and well appointed.

A cute country cottage would have been lovely but the maintenance of it would have put us off. I certainly would have worried about it.

A second home is doable if you have a decent income. We got ours around retirement age (though husband is not completely retired, works part time), couldn't have afforded it when young.

Correct, what is your point?

Don't be disingenuous, OP. You're looking for someone to pay the mortgage on a property investment for you. That's your ultimate aim.

2 points

I think you make some good and fair points, it would probably be good if money was spent supporting local hoteliers rather than air b n bs

I much prefer Airbnb’s than hotels where you are crammed into one room with one tv and by the time we are in there is hardly enough room to swing a cat or at the mercy of either a chain hotel or some hotelier who thinks decor hasn’t moved on since the 1980s. If you do find a decent hotel and you get 2 rooms for a bit of space then the cost is so much that you can’t afford to go anyway.

I also put to you with 10+ years of working in housing that there are many areas in the UK where people cannot buy and social housing is scarce which is something I was looking to assist with

You do realise if you get a btl mortgage then you will not be able to rent to the people you are thinking of. Your mortgage company will not allow it.

@Oliversmumsarmy what people do you mean? People on benefits? Not everybody who lives in social/affordable housing claims benefits?

I live in Switzerland and have a holiday home here

You can only buy a 2nd home that is classified as being a 2nd home

There are home that are for locals - these are cheaper but you have to live & work in the area to be able to buy them

If I pay to use hotels then I have no investment or return on my money. If I have a holiday home it is likely to at least maintain its value.
By using our holiday home, our friends and family invest quite heavily in the local community and bring wealth and jobs. Our cottage users eat in restaurants, use bars and pubs, use the local cinema, buy fish off the boats, rent beach huts, have food deliveries, visit tourist attractions etc.

@CherryPavlova I am not considering a holiday let but I think what you say is very true. As an example, my husband and I go and stay in a very quiet Welsh seaside town a couple of times a year and spend a minimum of £400 over a couple of days. We go out of season too.

Not everybody who lives in social/affordable housing claims benefits

But if they live in social affordable housing why would they rent privately from you.

I am a bit confused on what exactly you want.

What do you deem an affordable rent?

You have to charge at least 25% more than your mortgage.
You have to cover things like landlord insurance (and full agency fees because you can’t get particular insurances if you don’t have your property fully managed).

The fact that you might get a tenant who leaves you with a huge clear up, repair and redecoration bill and void periods.

I get the impression you have this thought that btl landlords are over charging and you want to trail blaze and offer a cheap rent to some lucky person.

I think you need to do a little more research.

Rental properties don’t hang around on the rental market. That alone suggests that the rents are affordable.

A lot of what is being charged for a normal market rent is just covering the various costs and void periods you have to cover.

DH was in the Forces. We both owned properties separately when we met. We moved into quarters and rented out my house. DH had two houses with very small mortgages, both occupied by relatives rent free for over a decade. One is now rented out, but the other is still in use by a relative (20 years and counting...who actually sublets and earns from it, despite not paying us any rent ).

The plan is that they will each form a step onto the ladder for our kids, so it isn't about making money from them for us. More long term financial planning for our children.

We eventually sold my house and it formed the deposit for our family home when DH left the forces.

I bought my house, DH had a horrible flat.
He moved in with me and let some of his friends crash in his flat- as we weren't sure we'd work out. After DC3 was born (!) we sold it and bought a little house about 90 mins away, at the seaside.
We don't let it out, we do let friends go and we spend a lot of time there. We hope to retire there, and will possibly sell my house (which we all still live in) or give it to the kids- they may want to live here as it's well located for work etc.

I bought my first home at aged 18. By the time I met my husband at age 22, then wanted to move in with him at 25, my house had made very little equity and I'd have been hit with early repayment charges in the couldn't afford afford at the time. Mt husband and I then bought a property tog and we've had two ever since. X

Affordable rent is traditionally 80% of the market rent.

There are a number of local authorities whereby the allocations policies are so restrictive whereby many people who would have previously qualified for social housing through the housing register can no longer do so. This means they are forced into unaffordable market rent, way above affordable levels.

Most local authorities will offer assistance to those who do not qualify through the housing register for housing, to gain accommodation through trusted private landlords. Offering better security to both the tenant and the landlord. Often the local authorities will cover any void period to ensure the property is retained for this need.

@Oliversmumsarmy

JuneSpencer, if someone has a cleaner, do you see that as exploiting someone or paying them a wage?

How about when someone buys ingredients for £10, but uses them to make a cake for £30, is that exploiting their customers or being entrepreneurial?

Hire cars, immoral or business? Loans where someone is making interest?

Why is it different because the goods for rent is a house? The landlord is the person who has saved the deposit, taken the financial risk, pays taxes on their business, maybe even takes a loss in the short term.

OP I didn't answer your question.

I had a 2 bed 2 bath new build flat in zone 4 London (5 year fix) that I was able to buy as a trainee solicitor at a City law firm. It wasn't then and still is not now a fun or trendy area and my friends all turned their noses up.

Anyway 2 years on and I was engaged to now DH and we were wanting a house.

London prices being what they are we had two choices: sell flat and buy a house in a nicer but still not very nice area (e.g. Leyton stone or Walthamstow) or keep flat and get a house in our own area. For me it was a no brainer: if selling flat would've meant we could have afforded Islington then i would have sold it but it seemed like a big asset to lose to move to Walthamstow, ifyswim.

We were able to get a consent to let on the flat because we were still within the 5 year fix and so because we were relatively high earners by that time (my salary now much improved) we got a decent rate with a 10% deposit.

As for the deposit for the house, parents agreed to lend £40k (all paid back within 2 years using 100% of rental income from flat and savings).

By time the 5 year fix was up we had 3 years of history as landlords so we were able to remortgage and get a BTL easily.

We were very lucky - our margins were tight and we wouldn't have gotten a BTL mortgage had we needed one. CTL is imo an easy black door and if you have serious plans to invest in a second property then I'd advise you to take out a five Yr fix when you next remortgage and check with your broker that the lender is amenable to CTLs. Not all are.

Sorry I mean margins were tight according to the banks. We found it all very affordable.

getmeacupoftea Where my second/holiday home is located, Local Occupancy restrictions mean only people who meet certain criteria can buy a particular houses. This seems an excellent idea and stops those who live and work in the area being priced out of the market.
When I visit my property I eat out 90% of the time as well as visit theatre, music and movie venues so bring lots of revenue to the local traders.

The fact is BTL (Borrow To Leech) creates it's own demand, can we please stop with all this nonsense about ''doing a service'' and ''providing a home'' for someone.

There's a lot of silliness on this thread as there always is with BTL discussions. Most landlords are neither philanthropists nor cowboys. My BTL flat is an asset and an income source but that doesn't mean I'm Scrooge. My tenant is sensible and fair and so am I. It's not exploitation.

In all the debate how did everyone miss this:

We were given a little holiday cottage by my husband’s boss years ago.

Where can I get employed by such a generous boss?!?? 😂

@missbattenburg

missbattenburg it was indeed very generous. It had been his mother’s house. We’d used it for a few years as we couldn’t afford a family holiday otherwise. He became unwell and didn’t use it anymore but still felt and emotional attachment and because of a subsidence risk would have been hard to sell. It needed some work and he said since we would continue to use it and enjoy it, we could have it.
The land overlooking the bay is now underpinned so subsidence isn’t an issue. We extended slightly and put in a new kitchen, bathrooms etc. The boss’s health improved somewhat but he’s no longer young. He now has the very occasional weekend out there but doesn’t want the hassle of ownership and is delighted our children now want to use it as a romantic hideaway. He’s like the grandfather our children never knew.

The fact is that 'buy to let' properties do provide homes for people. The couple of places my husband has bought have been let through a lettings agency, at very reasonable rents, less than other places in same area and the tenants are very happy there. There is an income from them, they have gone up in value and the occupants have a decent home. Satisfaction all round, what's wrong with that?

summerbreezingin

But 80% of the market rent would probably be in contravention of your mortgage agreement.

I think you want to go into btl to be philanthropic and just cover your bills.

I used to do btl. I would charge market rent.
Over the years by the time I had added in void periods, agency fees and all the other hidden costs of doing btl I probably made only a small amount each month on each property. Definitely couldn’t have afforded to take only 80% of market rent.

Where I did make my money was when I sold or remortgaged.

I think you need to really research how much you need to pay for before you go into this business as I get the impression you think landlords are money grabbing and over charging people because you are only looking at the mortgage on a place compared to the rent coming in and not adding in the list of other expenses you have to pay for.