According to the most recent figures, it’s not just the first-time buyer market hitting a record buying frenzy. The latest available data collected by the MHCLG English Housing Survey highlights the number of second homes in the UK has soared to a staggering 495,000 in 2018/19, which reflects an increase of 30% over the past five years. The survey also revealed that 451,000 of the 495,000, or 91% of the second homes owned by UK residents, are located in England.
Overall, the data confirms fast-rising demand for second home ownership and presents urgent questions about the role and future of second homes, particularly in light of Covid-19. While pent up demand triggered by the lockdowns and new remote work lives are all fueling the great escape to the country, could property’s continued appeal as an asset class also be a driving force?
What’s behind the boom in second homeownership?
Facing the possibility of no international travel, second homes have become a haven for many; in both financial and personal terms. Some see the commercial advantage of owning an additional property, whilst some appreciate the prospect of escaping city life.
Steadily rising house prices have equally shone a light on the property industry as a stable financial investment. This general trend, paired with the economic turmoil triggered by Covid-19, could have encouraged many to consider active property ventures to drive a second dependable stream of income.
The potential impact of Covid-19 on these 495,000 second homes
Covid-19 has seen uncertainty crop up in all aspects of life and has certainly raised some interesting questions for the future of second home ownership in the UK.
On one hand, the pandemic may have encouraged some to sell their second homes. Reduced incomes and uncertain work statuses may have caused some to simply sell their holiday homes for an immediate cash boost. The employment crisis sent some Britons into early retirement, and again this may have led to a wave of people moving to their countryside abodes, and getting some distance from city living. Furthermore, long periods in lockdown have undoubtedly provoked thoughtful reflections on lifestyle, and for some city dwellers, pent up demand has been the impetus to move to more scenic, spacious surroundings.
The unprecedented upheaval triggered by COVID-19 is likely to be underpinning a resilient second home market that meets thriving appetites for larger, upsized properties. Multiple lockdowns have forced millions into a remote working routine, and with predictions across industries that the new norm of flexible working is set to continue, to some extent long after lockdown restrictions are relaxed, it makes sense that an increasing number of people are using the opportunity to move away from the city. This pattern of restrictions being enforced and relaxed may have convinced some to invest in second homes, retaining city-based properties for use only when they are required to be in the office.
On the other hand, others have spotted the commercial value in renting out a second property, particularly as the appetite for staycations from lockdown weary Brits continues to rocket. In 2019, for example, one in ten families had incoming wealth from second-home ownership, highlighting a rising trend of second homeownership, particularly in countryside locations long before Covid-19 began to impact everyday life. Now as Brits gear up for June 21st and the return to some semblance of normality, second homeowners have an unprecedented opportunity to support staycation demand by renting out their properties.
What does the future of the buy-to-let industry look like?
The restrictions on travel and holidays and the transformative effect of the pandemic on our daily lives will have seen many second homeowners debate the role and the future of their second homes. The shift towards staycations, paired with a burgeoning desire to secure a second stable stream of income, means that second homes increasingly represent a valuable asset with the potential to generate a sizable income.
However, many will shun this prospect of commercial viability choosing instead to move into their second homes and take advantage of new remote and flexible working conditions. This unprecedented reshaping of our working lives coupled with a trend of fast-rising house prices may have convinced thousands to take the leap into second homeownership.
Could second-home owners support an economic rebound?
With question marks hovering over international travel, destinations around the UK are reporting record numbers of tourist bookings as staycationers rush to book British beach holidays. In light of the surge in demand, traditional accommodation across many tourist hotspots will simply not be enough to keep pace with expected demand meaning a number of regions could miss out on a roaring tourist trade. Second-home owners now have an unprecedented opportunity to help fill the critical gap in supply needed to accommodate surging tourist numbers and help to bring fresh spending power into their local communities.
Renting out a second property is not only of commercial benefit for those with a home to rent, but it also contributes real social value to local communities. Not only will filling these empty homes bring obvious support to local high streets, but rural communities could benefit from visitors discovering the hidden gems of their rural havens.
For many of the UK’s charming rural areas, there is a dependence on the injection of income from the tourist trade. As Britons tentatively begin to enjoy new post-lockdown freedoms, now is the perfect time for homeowners to seize the opportunity to open their doors to local communities, putting otherwise unused homes to productive use. With such unprecedented demand for readily available accommodation across tourist hotspots, the role of second homes is fast evolving. Owners' entire relationships with their properties have the potential to be reshaped by the combined prospect of generating holiday let income and driving local tourism.
