A report published by the Resolution Foundation has found that the number of individuals who own a second home rose by 30% between 2002 and 2014.
The think tank’s research revealed that 5.2 million people now own a second home. In contrast, four in ten adults own no property at all.
It also suggested that ‘baby boomers’ aged between 52 and 71 are the most likely to own a second home.
Since April 2016, buyers of second homes in England, Wales and Northern Ireland have been required to pay higher rates of Stamp Duty Land Tax (SDLT). Buyers of second homes in Scotland are required to pay higher rates of Land and Buildings Transaction Tax (LBTT).
In addition, starting from April 2017, new rules restrict relief for finance costs on residential properties. For 2017/18, the deduction from property income is restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction.
Over the subsequent three years the direct deduction of finance costs will reduce by 25% each year until 6 April 2020, when all finance costs incurred by a landlord will be given as a basic rate tax deduction.
Commenting on the findings, Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said: ‘Contrary to the popular narrative, these second home owners are rarely your typical middle-income worker shoring up savings, or ordinary retirees boosting pension income.
‘They tend to be baby boomers who are very wealthy indeed relative to their peers, living in the South and East of England.
‘Policymakers should consider what more can be done to ensure that home ownership doesn’t become the preserve of the wealthy for generations to come.’
We can provide advice on all aspects of tax and property – please contact us for help with planning ahead.