Five ways to wreck the second home dream

When you suddenly think you'd love to buy that place in the sun and rent it out when it's not needed, think again. Those boring shares may pay better, and leave you free choices Diary Of A Private Investor Terry Bond
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The Independent Online

For some the onset of that peculiarly British disease, secondhomeitis, came early this year. Jean and Norman, who live opposite my cottage, were stricken in February and near-neighbours Antonia and John were not far behind. Jean and Norman went to Portugal for a long weekend and returned having bought a plot of land, instructed a local architect, arranged for three local builders to provide construction quotes and retained a man with a twitchy twig to find an underground water source.

For some the onset of that peculiarly British disease, secondhomeitis, came early this year. Jean and Norman, who live opposite my cottage, were stricken in February and near-neighbours Antonia and John were not far behind. Jean and Norman went to Portugal for a long weekend and returned having bought a plot of land, instructed a local architect, arranged for three local builders to provide construction quotes and retained a man with a twitchy twig to find an underground water source.

Antonia and John had an idyllic week in south-west France, fell in love with the area and returned as the proud owners of a derelict barn-cum-shack. Ignoring the obvious restrictions of his bad back and her privileged upbringing they declared a firm intention of tackling all aspects of the renovation themselves.

Six months into their spur-of-the-moment projects the couples' lives are transformed. Jean has become expert at reupholstering old chairs and shortening curtains that have lain in their attic for years while Norman is learning to swear in Portuguese and at the same time running up an international phone bill that should go a long way to solving BT's cash-flow problems.

Antonia has become a bore on our morning dog-walks. She has a Walkman and headphones and, if ever her aunt loses her pen in France, Antonia will be able to ascertain its whereabouts from the locals. John is halfway through Septic Tanks for Beginners.

My neighbours are examples of the thousands of Britons who, each year, decide to invest their savings in overseas property. And, as I sit here beside a private swimming pool outside this superb four-bedroom villa in the heat of the Mallorcan summer, I can well understand their motivation. I have rented this place to provide fun and sun for part of the Bond menage. All ours for a mere £1,350 a week, but imagine how much better it would be if we owned the place. Come and go as we please, lend it to friends, rent it out for those weeks we don't want to use it. At this rental the place will more than pay for itself. And when the time comes to smell the flowers, when the life of the lotus-eater replaces the desire to make money, where better to live than in the sunshine clime of northern Majorca?

There's the investment aspect. At present, property must surely be a better bet than shares. The poolside conversation amongst the Bonds turns euphoric. There's no doubt where the enthusiasms lie. Look at the grandchildren enjoying themselves in the water, watch as the son-in-law throws another steak on the barbie.

Should the patriarch hang on to his boring old shares or sell a wodge of them and buy a lovely holiday home? No contest. When the heat has gone out of the day let's all mosey on down to the estate agent in Pollensa and check out available villas.

At this point I extract from my wallet a small piece of paper that has travelled with me on every overseas holiday for the past 11 years. Through the Eighties I ran a company which sold property in the Canary Islands and mainland Spain, and during that time I came to recognise the symptoms of second-homeitis well.

Fair-haired people, Britons and Scandinavians, were particularly prone to the bug and once bitten it was like offering sweeties to children. My little list has just five points:

* Cost;

* Commitment;

* Restrictions;

* Remote control;

* Bureaucracy.

Sitting by my rented pool outside my rented villa I considered them.

Cost: To acquire the acre of land and build a villa and 15-metre pool, similar to the property I am renting, would cost at least £350,000. My experience and a quick check in the Mallorca Daily Bulletin tells me this is probably a considerable underestimate. Even with today's pathetic interest rates and poor stock market, that amount could easily earn a minimum return of £20,000. I also know that, if I decided not to rent the property and keep it for friends and family only, the maintenance costs on such a property would be at least £15,000 a year. Remember you would have to employ a gardener, a pool maintenance company, a cleaner, and so on. That's kissing goodbye to £35,000 a year and I haven't even bought a plane ticket there yet.

Commitment: Forget the excitement of discovering new places, visiting parts of the world you have never seen before, those relaxing weekend breaks in luxury hotels. You own this place and you have an obligation to get maximum usage from it. Every chance you get, you go there. And you spend most of the holiday redecorating, replacing broken crockery and doing maintenance.

Restrictions: You can mitigate my first two objections by renting the place out. You hand it to one of those companies that produce the magnificent brochures of luxury properties to rent (that's how I found this villa). If they agree to take your property on (and that is by no means certain) they will expect a huge slice of the letting income to cover their costs (advertising, glossy brochure etc) but, most importantly, they will usually restrict your personal use of your villa to the unpopular weeks, eg, in the case of Spain, the last two weeks of November and the first two weeks of December. That isn't what you bought the place for.

Remote control: If the drains get blocked and there's an infestation of ants it is a long way for you to go to put things right. And whether you are renting the place or keeping it for yourself and your friends you will want fresh sheets on the beds ready for each arrival. An on-site management company is essential because all rental companies insist on it, and good ones are expensive.

Bureaucracy. Local taxes, water rates, getting a phone installed, paying part of the national insurance contributions for the maids, filling in the dozens of forms involved in owning a property abroad. Then there's exchange rates, overseas taxes and double taxation agreements ... Carefully, I fold my slip of paper and put it back into my wallet. I dive into my rented pool, ignoring the cries of: "Meanie".

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