Following on from our article on the advantages of buying on a holiday home or luxury lodge on a park, here are some of the disadvantages or at least some of the issues to be aware of.
You don’t own the land
Holiday homes on parks are typically sold on a licence or lease which can be for 50 to 99 years. Unlike a freehold property, the land under the holiday home is owned by the park which can lead to problems in some instances.
Mortgages
A traditional mortgage will not be available on this type of property so finance may need to be considered. Many parks offer finance schemes to help new owners, while another popular option is to re-mortgage another owned property, typically the main residence, to free up funds for purchase.
Can’t be used as a personal address
The park, unless residential, will have restrictions on how much the property can be used in a calendar year. This might have a minimal impact on ownership and usage, say 1 month a year, but it is worth finding out the exact limitations. A buyer will also be required to provide their main residence address, as the park cannot be lived in permanently.
How to sell them
This is a discussion to be had with the park at the time of purchase considering the exit strategy. Research how other owners have sold on the site if possible and identify any fees and limitations the park may put on owners who wish to sell.
The future value of a park holiday home cannot be accurately estimated of course, as there are so many factors to consider including the economy, supply and demand in an area and competition from other sites.
Also be aware that if the holiday home is part of an inheritance, the new owners will be liable for the running costs, primarily the annual ground rent...
Annual ground rent
This is a fee paid to maintain the park and services to the holiday home, which includes services such as landscaping and gardening, security, then facilities such as swimming pools and other services the guest uses. In some cases water rates and other utilities may be included, though can be verified with the park.
As there is no council tax to pay, the ground rent charge is the only main big running cost, though it can be in the range of £2,000 - £3,000 a year which will be more than a equivalent council tax cost.
