Where the holiday home market is collapsing

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When Harriet Hunter bought a second home on the Isle of Wight, the decision was made more with her heart than her head.

Two years later, Hunter is still in love with the converted former church on the Isle of Wight. 

“I love property and I spend a lot of time fantasy house hunting,” says Hunter, who lives near Dorking, Surrey, with her husband Mat and their two teenagers.

Her second home, The Mission, is a Victorian-era evangelical church, which was used as a holiday rental – she thought it would make a perfect side hustle. Mat, who runs a business innovation hub, agreed to remortgaging the family home to help pay for the four-bedroom building, and Hunter took over in the summer of 2022.

But she has come to realise that turning even a modest profit on the £500,000 property is going to be a difficult task.

Hunter lets the house via Host Unusual, and bookings are strong throughout the school holidays and at weekends. There are also chances for free family stays when it is not in use. 

But maintenance costs have been significantly higher than she had anticipated, and while her holiday let business is covering costs, it is not earning her any money.

“I do it because I love hosting, and making things beautiful,” says Hunter, who is in her fifties. “It is not a money-spinner but hopefully it is an asset, although I don’t know if it will appreciate in value.

“It had been on the market for some time before I bought it because you can’t live in it; you can only use it as a holiday home or a photographer’s studio, and because it is made of tin it is not mortgageable.”

It is experiences like this – along with the flurry of financial headwinds which have battered the UK over the past couple of years, from tax rises to rising interest rates – which have caused a collapse of the second home market.

Specific roadblocks include stamp duty – in last year’s Budget, buyers of second homes were hit with a 5pc tax surcharge when buying a property, up from 3pc. There was a further blow last year when the furnished holiday lettings tax regime, which allowed landlords who rented out fully furnished properties to get tax breaks, was dismantled.

This year, dozens of councils across England will start charging second home owners higher rates of council tax. 

Cornwall council is just one which will insist second home owners pay double council tax from April onwards – Hunter will also be hit by this change on the Isle of Wight.