Second homes generating more income than ever for owners
Homeowners across the world who own a second property are now significantly more likely to rent it out for income than they were a decade ago.
More than two-thirds of second homeowners globally rent out their additional property either as a source of income or to cover the costs of the home, according to new research compiled by Savills with HomeAway, showing a sizeable change in how people are using their property assets now compared to 10 years ago.
Out of all the second homes bought today, more than a third were purchased solely as a rental property (as opposed to those that are now being rented out when this wasn’t the initial intention, for example). Looking back to the situation 10 years ago, this figure was just 19%, while back in the early 2000s it was an estimated 14%.
People enticed by holiday homes
The study, which looked at a cross-section of second property owners internationally, also shows that in the 1970s, 90% of people who owned more than one property kept it solely for their own use, demonstrating how attitudes towards property ownership have switched over the years.
One reason for this change could be down to the increasing popularity of holiday homes as an alternative to a traditional hotel or bed and breakfast, and this is particularly the case with younger travellers, said Christophe Pingard, vice president EMEA of HomeAway. “They are willing to invest in their trips, although price is still an important factor when choosing accommodation, particularly as they are travelling more often,” he added. “That’s one of the factors that make staying in a holiday home so attractive.”
Making money from property
With the rise of Generation Rent meaning more people than ever are entering the private rented sector, rental yields are also a consideration for many owners of second homes, with around a third of people making enough rental income to cover their costs. This could be beneficial for those who only want to do short-term lets or those who are hoping to make profits from capital appreciation when they come to sell. Meanwhile, another third are making a profit through rent.
The location of a property will have a major influence in how much money can be made from it, but the research seems to suggest that more people than ever are dabbling in property investment to make financial gains as opposed to keeping a bolthole for personal use.
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