New research by business consultancy Hargreaves Lansdown shows that 87% of people aged 55 and over don’t think that buying a holiday home is either realistic or desirable.
They’re even less interested in them than younger people (69% of those aged 34-55 and 39% of those aged 18-34 aren’t keen and don’t think it’s doable).
Younger people were more interested in the idea of a second home, but overwhelmingly didn’t think it was realistic – only 30% of optimistic 18-34-year-olds thought it was realistic and 10% of those aged 35-54.
In 2021, 447,000 people had a holiday home where they spent more than 30 days – up 4.7% in ten years. That’s 0.76% of people in England and 0.56% of people in Wales (ONS).
Some 77% of them were aged 50 years and over, and they’re getting older: the peak age of holiday home use was 64 in 2011 and 73 in 2021 (ONS).
These figures come from a survey of 2,000 people by Opinium for Hargreaves’s Lansdown.
The dream of a second home in retirement is slowly dying. Gone are the days when millions of people dreamed of wintering somewhere sunny, or enjoying short breaks to the seaside without the cost of a hotel. Now, a combination of soaring property prices, council tax hikes and endless hassle mean it’s no longer on the bucket list.
The census figures look distinctly like there’s a specific group of older people who were able to buy a holiday home when it was far more affordable and are now ageing. For younger people, it’s hard enough to imagine being able to afford a property of their own, let alone the outlandish possibility of buying a second one.
Even among older people, who may have bought their own home when prices were lower, and could possibly have the funds available, enthusiasm for second homes may be waning.
The figures show that only one in ten of those over the age of 55 thought it would be a good thing, just 3% thought it was realistic, and an impressive 87% thought it wasn’t doable or desirable.
The biggest barrier will always be the cost. The soaring cost of properties has pushed most people out of the running, especially given that those second homes are likely to be by the sea or in the countryside, where you’re competing with other second-home owners for pricier properties. When you buy a second property there’s the extra stamp duty to think about too – plus a potential capital gains tax bill when you sell.
For the vast majority of people, it’s just not feasible financially. It’s one reason why around half of people who own a second home are among the fifth highest earners in the country and more than a quarter of them have their first home in London – where wages are higher, and they tend to have more property equity and assets they can leverage to afford a holiday home.
Some people will buy cheaper property overseas, but restrictions on how much of the year they’ll be able to stay will mean they can’t get the same use of it as they once could. The pandemic also made some people realise that there could be forces out of their control that put a trip to an overseas property out of reach. Plus, there’s the variability in the cost of flights that could suddenly make regular overseas travel harder.
If you buy in the UK, it’s not just the initial outlay you have to worry about, there’s also the cost of bills, including the standing charges on utilities and the council tax. In some areas there’s also a council tax supplement for second properties.
Then there’s the extra work involved. You have to run two homes, paying all the bills, and keeping on top of any repairs and maintenance. There are plenty of people who spend their holiday painting a spare bedroom or unclogging pipes, and wondering whether this was really the life they once dreamed of.
However, there are still people who may want to live close to friends and family, and yet escape regularly for a break. Not having to pay for accommodation when you travel – or arrange it in advance – means you can go more often, and at the drop of a hat. There’s also the benefit of knowing you have everything you need when you get there, rather than having to pack your own salt or wonder if the Airbnb has a sieve.
If buying a second home is on your wish list, you need to plan carefully towards it. The earlier you can make plans, the better. Starting a decade or more in advance means you can save little and often, and have time to let it build. It also gives you the option to invest your money in a stocks and shares ISA, and give it the best possible chance of growth while you’re building towards a purchase.
If even this will leave you a long way short, it’s worth considering whether you can achieve the same thing, but with a different approach. You might find, for example, that selling up in retirement, and moving altogether to a place by the sea or in the country, proves more practical in the long run.
By Sarah Coles, personal finance analyst at Hargreaves Lansdown