Go west for second homes that offer more

Cornwall's status as a holiday hotspot makes it a target for people wanting a dream property that pays. Monica Woodley takes a look around

Cornwall, a perfect location for a staycation. For many, the county offers riviera style without leaving Blighty. It was recently named the UK's best county for a holiday at the British Travel Awards and demand for holiday lets in the South West was up 70 per cent in the early months of 2011 compared with the same period in 2010.

Although hit by the recession, second-home ownership in England was still at the second highest level on record in 2010, slipping slightly from 2009 levels (due to a decrease in second homes in London), according to the Knight Frank 2011 new build second homes report. Cornwall has been one of the main beneficiaries of the trend for holiday home ownership, with four towns ranking in the top five of most expensive seaside towns, according to the most recent annual Halifax seaside town review. The average home in Padstow is £381,916, £370,902 in nearby Wadebridge and £363,494 in Fowey.

"Demand in the market was depressed during the recession and its aftermath, but we found that activity was supported to some extent by families buying second homes, not just as a luxury, but as a safe haven for their money," said Miles Kevin, head of residential development for the South West at Knight Frank. "In terms of pricing, the best-known places such as Padstow, St Ives, Rock, Dartmouth and Salcombe have proved very resilient. These 'prime' areas in the South West can command an uplift in prices of up to 25 per cent."

Cornwall has seen several trends driving change in the local property market. Demand for larger houses has risen strongly over the past 12 months as more families choose "generational" holidays, with grandparents, children and grandchildren staying in the same holiday property. Mr Kevin confirms: "There is definitely a rising trend for larger properties as families look to holiday as an extended family or with friends."

It is also no longer seen as just a seasonal destination, with visitors coming only at Easter and summer half-terms. The growth of the holiday home market has led to people wanting to make use of their properties all year round. This has had an impact on local communities and the service industry. Where staff used to be hired seasonally, hotels and restaurants can train and keep their staff all year round. This has meant more jobs for the local communities but also better levels of service for visitors. People are now used to travelling abroad and experiencing high standards, and they are demanding that at home as well.

Cornwall is known for its beautiful landscape and coastline but its two coasts can offer different experiences. While Newquay is the most visited spot in Cornwall, known for its surf and party culture, the south coast is a bit quieter. But that does not mean there is not much to do. With attractions such as the Eden Project and the Lost Gardens of Heligan, scenic seaside villages and activities including canoeing, sea kayaking, horse riding, cycling, fishing and coastal cruises, there is plenty to keep holidaymakers entertained. Mr Kevin says: "In terms of areas, we think south Cornwall is the next up-and-coming area, as it is less developed than the north coast. The coastal areas around St Austell are stunning."

Banking on the appeal of this area is the Cornwall Hotel Spa and Estate. Set on 43 acres, the four-star hotel just outside St Austell opened in 2010 and is clearly aiming at luring the type of holidaymaker more used to boutique hotels in exotic destinations. The renovation of the central building, a manor house built in 1834, has made the most of its Victorian heritage and parkland setting, while still offering modern amenities. Its Arboretum Restaurant, with two AA rosettes, and Clearing Spa, with gym, infinity pool, sauna/steam room and five treatment rooms, add to the upscale feel.

The Cornwall Hotel has also added to the area's second home market with 22 "woodland homes". The homes are on the grounds of the estate and owners and guests benefit from membership at the spa and concierge service from the hotel. The homes come ready to use – fully furnished and equipped – at prices from £285,000 for two-bedroom homes and £340,000 for three bedrooms. Prices include 20 per cent VAT, which can be reclaimed if an income is earned from the home. Homebuyers can choose to keep their properties for their personal use but the Cornwall also offers three options for buying and letting, one of which guarantees an annual net return of 6 per cent, after service charge and running costs, for the first two years. This allows personal use of six weeks a year. There are plans to build up to 60 woodland homes on the estate.

Sales director Sam Weller says the woodland homes are ideal for the type of holiday-home owner he is seeing more of in Cornwall. "People want less fuss; their lives are busy enough. They want to be able to come down on holiday and have their home ready to use, with the fridge full and beds freshly made. They want to be able to forget about it when they're not there. However, they also want their home to generate an income – but again, without unnecessary fuss."

For Paul and Karen Lysley of north Wiltshire, ease and flexibility were key factors in their decision to buy at the Cornwall. "It's really handy that, having the hotel nearby, we don't have to think about having to clean our woodland home for the next person, whether that's family, friends or through the rental scheme," they say. "Staying in a home means you can cater for yourself but also have the luxury of the hotel's restaurant close by. And when our family comes in a big group they can stay in the hotel rooms or other homes just a short stroll away. It means we have the potential to have a once-a-year family gathering without it costing the earth."

Cornwall has become a more easily accessible destination for a relaxed weekend break, with improved infrastructure such as the A30 motorway to Exeter, Newquay airport and mainline trains. First Great Western trains take four hours and 15 minutes from London Paddington to St Austell, with 28 trains a day during the week, 20 on Saturdays and 17 on Sundays.

Of course, easy travel is not the only appeal of buying a holiday home in the UK – the fact that you do not have to deal with foreign laws and taxes, with contracts in another language, and can finance with British banks is a major attraction.

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