22 May 2013

Posted by Discount Insurance on Wednesday, May 22, 2013
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Now is the best time in recent memory for those looking to expand your housing empire. From high end markets such as the Alps and the Cote d’Azur (which have been kept relatively affluent), to the other end of the scale where sales in the Costa del Sol have shown sales to be up 74% this year, property prices as low as £125,000

The number of Britons deciding to buy second homes overseas increased from 385,000 to 430,000 between 2006 and 2010, and the number has continued to grow into 2013. All of this is happening despite EU-wide recessions and downturns over the last nine years.   

If you are looking for a wise investment in the current climate, good places to look include Spain and Italy, where it is possible to get a lot for your money, while expecting to see multiple rises in house prices and the ability to let for more in the coming years. After a difficult financial year, the Spanish government introduced a lower VAT of 4% on homes and reductions on Capital Gains Tax to encourage growth in their housing market. Good locations such as the Balearics and the Costa del Sol would see a definite rise in your returns on the property for the next few years.

There is similar evidence in the Italian housing market. If you are willing to pay a bit more given the high-end location, then Sardinia is a good option, with prices on the brink of soaring in regions like Cagliari.   Here evenings can be spent enjoying the spoils of the local fishermen and vineyards in a comfortable, quiet atmosphere and old mansions are being quickly converted into trendy apartments. The area comes with the slight issue that the tourist season is relatively short, so sharp investors would be wise to secure long-term lets over the Italian winter. The area could see one of the biggest rises in the EU with a predicted rise of 20% in 3 years for apartments and houses from £231,000 up to £1.5million, if you’ve got a little more cash on the hip.

If your sights are more set on the winter holidays market, there is evidence of interesting developments in the French Alps on sale & leaseback schemes. The idea behind the scheme being that an investor can purchase a property, on the recently popular St Martin de Belleville slopes for example, for a price of around £170,000, and then immediately have the property let by experienced seller/management company who specialise in the area’s tourism, allowing the investor to ski for 3 weeks out of the year, and see a guaranteed annual return of 2-6% over a period of 9-11 years.

Riskier, or certainly more inadvisable, investments would include properties in Greece and Cyprus. Though the mainland continues to see small returns from holiday home investments after their 5 year recession, lets on the Greek islands such as Corfu and Rhodes may see an increase of 15% in the next five years. Similarly, with lets in Cyprus, although housing prices are seeing an all-time low, as are rental returns. However, due to this climate, banks are currently reluctant to part with mortgages to owners without considerable disposable lump sums. So it may be a better idea to take your holiday letting interests away from this area for a while and wait and see if the economy fares better in the next few years.

Discount Insurance offers highly competitive rates on comprehensive cover for your holiday home, call us today to see how much you could save. 

David Steedman

0208 847 8000