Holiday at home: Second homes in Cornwall
European holiday destinations may be a property bargain-hunter's dream, but the pound's continuing weakness against the euro means maintenance and running costs – not to mention actual holiday expenses – have become something of a nightmare for sterling-based second-home owners.
Sterling's slide from a historical level of around £1 = 1.40 euros to 1.10 euros means, for example, that a bill of 500 euros that would have cost you around £350 will now set you back over £450.
That's one key factor in the rise of the UK 'staycation' – and the subsequent growing interest in UK second homes among buyers who might previously have focused only on overseas properties.
Moreover, developers are now making it a whole lot easier for owners with the introduction of American-style, hassle-free British holiday home opportunities.
The schemes come in various forms, but essentially take the effort out of looking after your holiday home. They also aim to make your investment work for you in financial terms, and to that end they typically offer rental packages and lure buyers with an initial guaranteed rental return.
"A lot of people love the idea of a second home, but they baulk at the cost and the responsibilities and worries that come with the kind of traditional period cottage they'd have bought in the past," says Miles Kevin, a partner at Knight Frank in Exeter.
"They want their own home, but they also want fluffy towels on the bed and a well-stocked fridge when they arrive. Our office has sold £37 million of these packaged second homes this year, which is not bad considering the state of the market during that time."
Cornwall in particular has been pulling in the punters. A recent survey by Travelodge named it as the most popular country with UK holidaymakers in 2009, and it was voted the top UK destination at the 2009 British Travel Awards – so it's perhaps unsurprising that so many developments are located there.
One successful model is the clunkily named 'aparthotel', where you buy your apartment fully furnished and equipped as part of a hotel complex, and it is maintained and rented out as part of the hotel's accommodation pool when you're not occupying it.
The 43-acre Cornwall Estate, near St Austell and the Cornish south coast, is a good example. There are 60 two- and three-bedroom timber and slate-clad homes, priced from £320,000, surrounding the former Victorian manor house, opening in February as a swanky hotel and state-of-the-art spa.
As sales director Sam Weller points out: "Cornwall used to be a beach holiday destination and pretty dead outside the high season, but now we see people coming down to walk the coast path, cycle the cycle routes, go to the Lost Gardens of Heligan, the Eden Project, the Tate at St Ives. We get high quality tourism most of the year now."
The Cornwall Hotel forecasts occupancy rates averaging 75 per cent, which bodes well for owners wanting to be sure of a steady rental income from their property.
Owners can choose from various models of use, including six weeks of occupancy a year and a guaranteed three per cent return net of all rental service costs for the first two years; they can also use their home at other times if it's not booked by the hotel. Income (once any guaranteed period is over) is split 75/25 between owner and hotel. However there will be a maintenance charge (as yet unspecified) to take into account.
If you do want to sell in due course you'll be free to do so on the open market, so you should benefit from any uplift in wider property values.
Along similar but distinctly pricier lines, there are currently two three-bedroom apartments available at £500,000 in the five-star St Moritz Hotel overlooking the Camel estuary near Rock – one of the most popular, and expensive, enclaves in Cornwall.
It's a great location for surfers, beachcombers, fish-eaters and celebrity-spotters, and owners can also bliss out in the hotel's Cowshed Spa.
Here, the deal is less flexible: owners have up to eight weeks' use through the year (including two peak season weeks), and earn a five per cent guaranteed net return for the first two years.
Be warned, however: the annual service charge is pretty steep, at almost £3,000 for 2009/10. Moreover, because five-star hotels have to maintain the immaculate standards of the rooms they rent out, owners are also expected to contribute around £2,300 a year to a furnishing and repairs sink fund.
If you can't stomach the crowds or the running costs of a second home in a hotel, Cornwall has some interesting alternatives. Six eco-friendly holiday homes are for sale for around £400,000 in the peaceful Jericho Valley, which leads to Trevaunance Cove, near St Agnes on the north coast.
Not only are they solid-looking, handsome, contemporary properties but green features such as ground source heat pumps and wood-burning stoves mean they're projected to cost less than £1000 a year to run.
Here too, the 'rent and relax' scheme on offer through the letting agency Heaven Sent Cornwall provides for a guaranteed net return of four per cent over the first five years, if you're happy to limit your use to eight weeks a year (including two peak weeks). If you take this option, a furniture and equipment package appropriate for luxury lets is provided by HSC.
Back on the south coast, The Bay is a 'private gated community' overlooking peaceful Talland Bay, near Looe; it doesn't involve a hotel, but does have the rental advantage of facilities such as a pool, tennis courts, health club, maintenance, cleaning and concierge services.
There are currently four contemporary house styles available, priced from £350,000, and an on-site letting agent will be available from February 2010 for owners who want an income from their holiday house: independent estimates of seven to eight per cent yields are being quoted, and a two-year guaranteed income with some provision for some use by the owner can be arranged.
A rather different proposition has just been launched by a Devon-based overseas property company. Having successfully offered fractional ownership schemes in other countries, Barrasford & Bird Worldwide are bringing their expertise to north Cornwall.
Fractional shares are available in two barn conversions near the village of Altarnum, on the edge of Bodmin Moor. Managing director Robin Barrasford sees a lot of advantages in the fractional model.
"It's an appreciating asset, but it involves vastly reduced prices compared to full ownership. That's because people only pay for the time they actually use – and they don't have to worry about what's happening to the property when they aren't using it," he says.
Shares in the smaller two/three bedroom Tregenna View cost £35,000 for four weeks' ownership, split into two blocks of two weeks that move forward by two weeks from year to year. Tregenna Barn is altogether grander, with large gardens, five bedrooms, a 42-foot reception room and traditional features by the bucketload; four-week shares cost £79,000. Here too, a rental scheme is in operation, with an attractive eight per cent guaranteed for the first two years if you're prepared to give up two of your four weeks to the company's rental pool. Another financial pull is the fact that there are no management or maintenance charges to pay for the first five years on these properties.
- The Cornwall
- The St Moritz Hotel
- Wheal Friendly Gardens
- The Bay, Talland
- Barrasford & Bird Worldwide
- Knight Frank
A lot of people love the idea of a second home, but they baulk at the cost and the responsibilities and worries that come with the kind of traditional period cottage...