Island Life Magazine Ltd August/September 2008 | Page 23

PROPERTY

life

Second homes, an
asset to the Island?
By Sam Biles MRICS FAAV - Creasey Biles & King
Second Homes – an emotive issue
inspiring strong feelings both
for and against. The Island has
a relatively high proportion of
second homes, some estimates
indicate about over 3,000 – 5%
of all residential properties.
There are particularly high
concentrations in Seaview,
Cowes and Bembridge where
some families have managed to
pass their holiday homes down
from generation to generation.
Areas such as the South Hams in
Devon, the Yorkshire Dales and
the Cotswolds all have many
second homes, often owned by
high-income earners from London
and the Home Counties. Ironically,
London itself has the highest
proportion of all!
Why do people get so wound
up over second homes? Several
reasons are put forward by
those against second homes:
that villages with many second
homes become ghost towns in
the winter; the local population,
particularly key workers, are

priced out of the market; that
local shops are unable to survive
without all year round custom.
There are, however, those
who believe that second home
owners bring benefits by coming
to the Island. Often with high
incomes, they spend money in
shops, restaurants, local services
and using local builders for
maintenance. They pay 95%
Council Tax whilst only burdening
the local authority for a short
period each year. Many let their
properties when they are not
using them, making extra bed
spaces available for the popular
self catering trade and providing
income for letting agencies, such
as Wight Coast and Country
Cottages and for their cleaning/
maintenance staff.
There is truth in both arguments.
Undeniably it can be pretty
lonely in Seaview in the winter;
few Islanders buy properties on
the sea front, however perhaps
the presence of the second
home owners has increased the

www.wightfrog.com/islandlife

number, viability and standards
of restaurants and facilities across
the Island. Our agency specialises
in the sale of high value property;
whilst many are bought as second
homes, increasing numbers of
buyers have had a second home
on the Island but then buy a main
residence here; they base the
homemaker and children on the
Island and retain a smaller base in
London where the breadwinner
is based, stretching weekends,
particularly in the summer, by
working from the Island using
modern technology.
Capital Gains Tax can be
important if second homes are
sold or transferred. New April
2008 rules brought in a flat rate
of 18% on any gains in value;
previously rates of 40% often
applied. Advice needs to be
sought from qualified advisers as
the situation is complex. It can
be affected by annual personal
allowances and whether the
property has been used as a
permanent home by the owners
or for holiday
accommodation.
After purchasing,
the owner has two
years to elect which
of their homes
is their Principle
Private Residence.
After the two years,
they lose the right
to nominate. The
onus then falls on
them to prove that
they were living in
the property if they
want to avoid, or
reduce, this tax. The
new rules do not

always mean a lower tax bill; until
April 2008, the seller of a second
home did not pay the entire
uplift in its value as they were
allowed to apply “indexation”
- to take inflation into account.
Neither is now available. As a
result, some owners will pay less
tax than before; others will pay
more.
Sam Biles is Managing Director of
Creasey Biles and King.
Specialist agents in the sale of
prestigious, country and coastal
property across the Isle of Wight
T: [phone]

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