Is buying a holiday home a good investment? Where to buy

If you’re one of millions who have embarked on a UK staycation this summer following the coronavirus pandemic, you may now be thinking of buying a second home as an investment.

With lockdown restrictions eased at the end of June, lodge holiday provider Hoseasons reported a booking every 11 seconds, while Airbnb revealed it had more domestic bookings in three days than during the whole of April.

With that kind of demand looking like it’s here to stay, buying a holiday home could be both a solid investment and a great place to whisk the family away for a short break whenever it suits you.

But where is the best place to buy a holiday home in the UK?

We’ve analysed Google search data to reveal the most searched for and most in-demand holiday home locations in Britain...

Holiday home trends for 2020

The biggest increase in holiday home searches was for properties in Herefordshire.

With a huge 600% increase in monthly searches, the rural tranquillity of Herefordshire and the Wye Valley is clearly in high demand.

A more surprising entry in our top-10 list was Surrey, which saw a 320% rise in searches during June.

Close to London, however, holiday homes or second homes in Surrey can be perfect investments for those who prefer a more urban staycation.

Elsewhere, coastal locations Dorset and Devon saw more than double the number of searches for holiday homes, while picturesque Scotland and North Yorkshire also ranked in the top-10.

Rank	Search term	Searches: June 2019	Searches: June 2020	% Increase
1	holiday homes herefordshire	10	70	600.00%
2	holiday homes surrey	50	210	320.00%
3	holiday homes norfolk	1600	5400	237.50%
4	holiday homes berkshire	10	30	200.00%
5	holiday homes rutland	10	30	200.00%
6	holiday homes northamptonshire	10	30	200.00%
7	holiday homes dorset	1000	2900	190.00%
8	holiday homes scotland	1900	5400	184.21%
9	holiday homes devon	1900	5400	184.21%
10	holiday homes north yorkshire	170	480	182.35%

Most in-Demand holiday home locations for 2020

British staycationers clearly still love a seaside holiday, as our top-10 most in-demand holiday home locations prove.

Way out in front was Cornwall, which saw a huge 174% increase in searches for holiday homes during June – taking its total monthly searches to just under 15,000.

Interestingly, Cornwall holiday homes were most searched for by people in Bristol, perhaps showing that staycationers don’t want to travel too far for a holiday on these shores.

Norfolk holiday homes, meanwhile, saw the biggest percentage increase in our top-10 most in-demand areas, with a 237% rise in searches in June compared with the same time the previous year.

Rank	Search term	Searches: June 2019	Searches: June 2020	% Increase	Most searched for by…
1	holiday homes cornwall	5400	14800	174.07%	Bristol
2	holiday homes scotland	1900	5400	184.21%	Edinburgh
3	holiday homes norfolk	1600	5400	237.50%	Brighton
4	holiday homes devon	1900	5400	184.21%	Bristol
5	holiday homes wales	1600	3600	125.00%	Liverpool
6	holiday homes lake district	1300	2900	123.08%	Liverpool
7	holiday homes dorset	1000	2900	190.00%	Bristol
8	holiday homes isle of wight	1300	2400	84.62%	Southampton
9	holiday homes northumberland	590	1600	171.19%	Newcastle
10	holiday homes north wales	720	1000	38.89%	Liverpool

Least in-demand locations for 2020

For all of the huge numbers of searches for holiday home locations in the UK during June, there were some places that saw less demand.

Searches for holiday homes in Bedfordshire actually dropped by 50%, with the county the only place in our top-10 to register a minus figure.

Rank	Search term	Searches: June 2019	Searches: June 2020	% Increase
1	holiday homes northamptonshire	10	30	200.00%
2	holiday homes west midlands	10	20	100.00%
3	holiday homes south yorkshire	10	10	0.00%
4	holiday homes bedfordshire	20	10	-50.00%
5	holiday homes worcestershire	30	50	66.67%
6	holiday homes berkshire	10	30	200.00%
7	holiday homes rutland	10	30	200.00%
8	holiday homes buckinghamshire	20	30	50.00%
9	holiday homes west yorkshire	20	30	50.00%
10	holiday homes leicestershire	10	20	100.00%

Is buying a second home a good investment?

Buying a second home can be a great investment, but how great will depend on what you want to achieve financially.

If you’re looking to rent out your second home, you should be looking to buy in an area where there is strong demand.

And if you’re buying a second home to use yourself, perhaps for regular staycations, you may be more focused on longer-term capital growth, so you’ll want to buy in an area where price growth is strong.

Following Chancellor Rishi Sunak’s decision to introduce a stamp duty ‘holiday’ in the UK, you could save a substantial amount of money if you buy a second home between now and March 31, 2021.

Take a look at our guide to the new stamp duty rules for more information.

How to buy a second home

If you’re buying a second home, there are things you’ll need to know and consider before doing so.

Stamp duty

Buyers of buy-to-let properties or second homes must pay an additional 3% in stamp duty.

So, even with the Chancellor’s stamp duty ‘holiday’ in place, you’ll still pay at least 3% in stamp duty if you buy a second home.

Your mortgage

If you’re buying with a mortgage and already have one on your main home, your lender will also want to know why you’re buying a second property.

You may also need to have at least 25% of the property’s purchase price as a deposit if you already own another property and your lender will need to be certain you can afford both mortgages.

Capital Gains Tax (CGT)

If you own a second property in the UK, you may be liable for Capital Gains Tax (CGT) when you sell it.

Council tax

Council tax is payable on furnished second homes even if you’re not living at the property full-time.