Second home developments have been one of the brightest spots in the UK new-build market through the recession and now into the recovery, according to Knight Frank. Knight Frank new-build second homes report 2010 • After a slight decline of 0.4% in 2008 the number of second homes in Britain rose by 2.6% in 2009, to reach record levels of 245,384. • Knight Frank expects to see a further 2% rise in the total to more than 250,000 in 2010 • Forecasts by Deloitte and Oxford Economics suggest that between now and 2020 the amount of money spent by Britons holidaying in the UK is predicted to grow by 2.6% a year in real terms • The amount of money spent by foreigners holidaying in the UK is predicted to grow by 4.4% a year • Growth in UK tourism over the past three years has expanded beyond usual popular months with the highest growth in bookings seen in September and October, as well as Christmas and New Year • 67% growth in nights spent in self-catering apartments in the UK between 2007 and 2010 • Growing demand is boosting yields. Good quality holiday lets typically offer between 5% and 7% gross rental yields, often achieving higher yields than properties let on shorthold tenancies Liam Bailey, head of residential research, Knight Frank, commented: “There are several reasons for the faster rebound in demand for second homes following the recent recession. Mortgage interest rates are much lower than they were in the early 1990s, which has reduced both the cost of acquiring property and the attraction of keeping money in cash. While credit has been severely constrained for homebuyers requiring high loan-to-value ratios, wealthy investors with large amounts of equity have been able to take advantage of low financing costs. “The potential investment returns from holiday lets is also a huge draw. Increased demand for self-catering accommodation throughout the year has enabled buyers to look upon a second home as an investment rather than a luxury. Investing in second homes has been made easier and more attractive by the emergence of managed holiday home developments. Owners do not have to property manage lettings themselves: this can be organised for them along with cleaning and maintenance. And buyers can still use the property for their own use for several weeks of the year so get the best of both worlds.
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