Buying a Second Home

Buying A Second Home

by David Redmond on 20 Jan, 2012

Buying a second home in England or Wales is becoming an increasingly popular choice for many people. Your additional property can serve a variety of purposes, such as a holiday home, a renovation opportunity, a ‘buy to let’, or a home for your children to live in whilst at university.

Whether you are buying a second home for personal or financial reasons, the conveyancing processes involved in the purchase are the same. Just like when you bought your main property, you will need a conveyancing solicitor to carry out the searches, transfers of funds and registration of the deeds and title. One major difference, however, is that time is not usually of the essence so there is less pressure for you to decide on a property, arrange finance and exchange contracts.

Your second home will be subject to the same costs and fees as when you bought your main residence, so you will need to allow for expenses such as stamp duty (if your second home is valued above the threshold), survey costs and mortgage application fees. You may find the mortgage for your extra property is cheaper than your main home’s mortgage, although you are likely to need a larger deposit – usually at least 25%. Before committing to buy, you should take advice about your finance options from your bank, mortgage broker or financial adviser.

You will also need to exercise caution if your second home is to be treated as an investment. Without adequate tax planning, you could find yourself liable to pay several different taxes which could destroy the value of your investment. If you rent out the property, you will probably have to pay income tax on the rent, although the amount can be reduced through allowable expenses such as mortgage interest, insurance and furnishing costs. When you sell your second home, you may have to pay capital gains tax of up to 28% if it is not your main residence and there are no tax mitigation measures in place. It is therefore essential to consult an experienced tax adviser to make sure your liability is legally reduced wherever possible.

Licensed conveyancers are available to help you with buying or selling your home. Some offer free advice and a ‘No Move No Fee’ guarantee so it’s worth getting a conveyancing quote.


About the Author

David Redmond

David Redmond is a Partner of Don Gilliard Finance Group. He is a fee-only, independent financial advisor and financial planner. For over 15 years, he has been helping individual investors and their families realize their investment goals.