Investing in a second home

Because of the decreasing interests on savings the more wealthy Dutch look for alternatives. An investment in a second home means a good investment for many people. That was shown by a survey that was launched during the recently held Second Home International exhibition.

More than half of the visitors indicated that the current economic developments influence the choice to purchase a second home. Important factors that influence the purchase process are the low real estate prices, the decreasing interests on savings, financial uncertainties and government measures. “Thanks to the price decreases the price levels of real estate are very low”, says Henkjan Prins, exhibition manager of Second Home International. “Houses that seemed unaffordable at first are now all of a sudden at an appealing price level.”

Droomparken confirms Prins’ observation. In the Netherlands, Droomparken seeks the limelight with its holiday parks but also with the sale of second homes. “It is an interesting investment with five to six percent return if you also let the house.”, says Marco Budding, marketing & communication manager of Droomparken. “That is much more interesting than bank saving. Consequently we see a clear increase. The past year we sold almost 20 percent more so called second homes. Hence, the investor looks for reliable alternatives for bank saving. Besides we have an ageing population that is financially well-off and likes to have a good return.”

Tax advisor Jan van Esch of Stolwijk Kelderman accountants/tax professionals in Zevenaar en Doetinchem admits that the market conditions are beneficial for people who are able to finance a part of the purchase price through their own resources. “However”, warns Van Esch, “it is a different story if you need to get a loan for a second home. The stricter standards of the banks can be a real problem.”

On that account, Van Esch has not the impression that the investments in a second home are increasing. “We notice that people are more reserved because of the decreasing house prices in the past few years. People who are considering purchasing a second home anyway, must gain enough information and foresee the consequences. Especially when you purchase something abroad. Then from a fiscal point of view you must know which taxes you will be facing in the country where the house is situated and which formalities need to be fulfilled. Moreover, when purchasing a second home you must think about transfer, sales and other transaction taxes and later also about property, income and inheritance tax.”

A second home is also just fun

A second home is more than a good investment, it is also just fun. To go there during weekends or to celebrate your summer holiday. With a second home you combine two happiness factors: return and fun. That is shown by research of the NRIT (Dutch Research Institute for Recreation and Tourism) among current and prospective owners of a second home. Half of the questioned people purchased their second home as an investment, while a third uses the home mostly for own holidays.

Source: Second Home International