Legal implications around buying a holiday home
It’s that time of year when we feel the sand between our toes, enjoy countryside views, or just experience a break from day-to-day reality, but if in your excess baggage is a brand new holiday home, there are specific legal considerations that will apply to bring the dream back to reality.
With the last summer bank holiday about to take place, it’s not unusual for people to want to preserve that holiday feeling and invest in a holiday property. We act for many clients who have done just that, but as with everything, there are certain rules to follow.
Buying a UK holiday home
Post pandemic when we were confined to the UK, holiday home ownership soared, and it’s a trend that has continued - whether it be a country cottage, bolthole by the sea or a spot on a caravan or lodge park.
“If you are planning on buying a holiday home, it is important to sometimes have a rethink and not get swept away by the moment and the sunshine; take time to consider the practicalities and long-term consequences to see if it’s right for you,” says Solicitor and Head of Residential Conveyancing, Victoria Marshall.
The same legal issues apply to holiday homes as any other property, and your conveyancing solicitor will undergo the usual searches and check the seller’s title. For apartments and caravan parks, it will be a bit different.
If you’re buying a holiday home, your conveyancer will:
Sort Pre-Contract Checks and Searches
Your solicitor will conduct various searches and checks on the property, including local authority searches, environmental searches, and title deeds. These searches ensure there are no hidden issues, such as planning restrictions, disputes, or environmental concerns.
Review the Contract
Your solicitor will review the sale contract provided by the seller's solicitor. They'll ensure that all terms and conditions are fair and accurate, including the price, boundaries, fixtures and fittings, and any special conditions.
Title Deeds and Ownership
Your solicitor will verify the title deeds to ensure that the seller has legal ownership of the property and has the right to sell it.
Property Survey
While not strictly a part of conveyancing, it's a good idea to conduct a property survey as this will help identify any structural issues or maintenance concerns with the property.
Exchange of Contracts
You'll exchange contracts once all checks are completed and both parties are satisfied. At this point, the transaction becomes legally binding, and a completion date is set.
Completion
On the agreed completion date, your solicitor will transfer the purchase funds to the seller's solicitor. Once the funds are received, you'll be the legal owner of the holiday property.
Land Registry
After completion, your solicitor will register your ownership with the Land Registry. This process ensures that your ownership is officially recorded and protected.
Stamp Duty
Depending on the property's value and location, you may be required to pay Stamp Duty Land Tax (SDLT). Your solicitor will assist with the calculation and payment of this tax.
Your solicitors will also check any special considerations, for example, if the property is listed, located in a national park, or an area of outstanding beauty, or has planning conditions restricting it, all of which determine what you can and can’t do to it.
“Whilst we don’t want to be killjoys and totally understand the excitement of buying a dream holiday home, it’s advisable not to forget a second residential property will incur extra stamp duty charges of an additional 3% of the purchase price,” adds Victoria.
“That needs to be factored in as it considerably bumps up the costs. Lenders will generally look at your projected level of rental income to see if you can comfortably cover your mortgage interest payment.”
Some clients come to us having considered apartments to perhaps minimise upkeep, but this brings into effect leasehold arrangements, and it could be that the flat cannot be let out on a short-term basis.
Buying a mobile holiday home
If you are buying a mobile home, you might own the physical structure but not the land on which it is situated and will need specific licenses.
“Whatever property you decide upon, there are implications, but nothing we have not dealt with before or are used to. At the same time, if you are letting the property, additional legal considerations will arise, and a good residential property solicitor helps ensure a smooth process throughout, avoiding any problems for you in the future,” warns Victoria.
You will also have legal duties and obligations as a residential landlord if you decide to let out your holiday home which includes:
- all gas and fire precautions
- carbon monoxide detectors
- extra insurance
If there are swimming pools as part of the property or development again, there are legal safety recommendations.
You will need specific insurance, and you must ensure that public liability insurance is included so you are covered if anyone suffers injury whilst staying at your holiday home. At Pearson, our personal injury team have acted for people injured on holiday through defective equipment or furnishings, and the compensation can be in the thousands.
You will pay capital gains tax when you sell the property, and it will form part of your estate for inheritance tax.
Remember that the conveyancing process can sometimes be complex, and it’s recommended to start the process early and be prepared for potential delays, but above all else, you will require an experienced conveyancing solicitor. However, once that’s sorted, you can get on with the fun bit and simply enjoy your holiday home and a dream come true.
How can we help?
For legal advice on buying a holiday home, contact our residential conveyancing solicitors on 0161 785 3500 or email enquiries@pearsonlegal.co.uk
Subscribe to our newsletterPlease note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
