The second home and the holiday let

A second property reaches your desk as a mortgage like any other. A client wants a flat in the city near work, a cottage the family will use through the summer, or a holiday let they mean to run as a small business. You assess affordability, place the loan and arrange the cover.

The purchase raises further questions: how the property should be owned, what tax applies while they hold it and when they sell, whether the family can afford to keep it later, and what a second, larger mortgage means for the protection they arranged years ago. Most of those questions fall outside what you are permitted to advise on, and you may be the first professional to see them.

Second homes, holiday homes and furnished holiday lets

A second home, a holiday home and a furnished holiday let look the same on an application: a property, a deposit and a mortgage. They differ once the client owns them.

A second home is bought to be used, as a bolthole or somewhere to retire to in time. A holiday home is used by the family and let for part of the year. A furnished holiday let is a business, bought to produce an income. The tax, the suitable form of ownership and the estate consequences differ across the three, and the application does not show those differences.

Tax on a second property

The higher rates of stamp duty on a second property are quoted early and paid once.

Other taxes apply later. A second property is exposed to capital gains tax when it is sold, because the relief that shelters a main home does not apply. Letting income is taxable and has to be reported. The property sits inside the estate for inheritance tax in full. Advising on any of it is regulated or specialist work that belongs with E&G.

How the property is owned

The property can be owned solely or jointly, as tenants in common or joint tenants, and in a personal name or through a company. You arrange the lending on whatever basis you are instructed.

The choice has long-term consequences. It changes how rental profit is taxed, who is liable for gains on a sale, and how the property passes on death. A couple splitting ownership unevenly, a parent buying with an adult child, a client weighing up a company: each is a planning question with a tax and succession answer. You do not advise on the structure. When you notice the choice needs advice, offer the introduction.

A holiday let is a small business

A furnished holiday let is run for profit, and it is a business with its own decisions to make, even when the owner thinks of it as side income. The special tax rules that applied to furnished holiday lets have changed.

That change affects the owner’s tax and planning. Profit may build up with no plan for it, and whether to fund a pension contribution from that income is a planning question. Advice on the pension, the surplus and the structure is E&G’s, and a holiday let on an application is the point to offer the introduction.

Protection after a bigger mortgage

Protection sits inside your permissions, and a second property is a time to review it. Buying again can double a client’s borrowings. The life cover they arranged for the first mortgage was sized for a smaller debt and a younger family, and may not have been reviewed since.

Putting that right is your work. Cover written into trust, the interaction with existing pensions and death benefits, and what the family would need if the main earner died holding two mortgages all sit alongside E&G’s advice. You arrange the protection and flag the rest.

Where the deposit came from

The deposit has to come from somewhere. Often it is equity released from the main home, sometimes it is drawn from savings or investments, occasionally it is money set aside for something else.

Taking the deposit may leave an emergency fund run down, investments sold at a poor time, or long-term savings used for a short-term purchase. Whether the money should have come from that source is a financial-planning judgement. You see it on the application. E&G advises on the trade-off.

The family holiday home and the estate

A family holiday home is bought to be shared and kept, which makes the planning questions about it harder.

The property is fully exposed to inheritance tax, and to a capital gains charge if it is sold. When the owners die, the children inherit a house they may not be able to afford to run, in shares they now have to agree on. Some want to keep it, some want the money. Trusts, life cover, gifting and clear ownership all have a part, and all of it is estate-planning advice for E&G. You may be the first to notice that none of it has been arranged.

Where your permissions stop and E&G’s begin

You can advise on the mortgage and the protection that goes with it, under your own permissions. You must not advise on the tax treatment of the property, on how it should be owned for tax or succession, on investments, or on estate planning. That regulated and specialist advice is provided by Equity & General under its FCA authorisation (No. 474163).

You introduce the client and stay involved. E&G carries the authorisation, the suitability obligation and the paperwork. The client receives regulated advice, and your own regulatory position does not change.

How the introduction works

When a second-property case raises one of these questions, you make a warm introduction to E&G with the client’s consent. E&G takes on the regulated advice and works from what the client tells them. You keep the relationship and follow every introduction through the partner portal, which shows its progress and the value building behind it.

You share in the value in two ways: in the initial advice income and in the ongoing value of the assets E&G comes to manage for your client. Commercial terms are agreed individually and are not a guarantee of income. The value recurs over the years after completion.

Second-property cases that call for an introduction

These come up in ordinary second-property cases:

A second home for personal use

— a client taking on a large new debt with protection sized for their first mortgage.

A holiday let bought as a business

— rental income with no plan for the profit and no pension attached.

A deposit released from the main home

— capital leaving one balance sheet with no advice on where it should sit.

A company set up to hold the property

— a structure decision with tax and estate consequences the client has not weighed.

A family holiday home meant to be kept

— a property the owners want to pass on, with no plan for how that will happen.

Questions brokers ask

My client is buying a holiday cottage the whole family will use. Is that a wealth introduction?

Yes. A shared family property raises inheritance questions as well as purchase ones. Who will own it, how it passes on, whether the children could afford to keep it, and how the tax is handled all sit with E&G. You arrange the mortgage and the protection, introduce the client for the rest, and stay involved throughout.

Can I advise the client on whether to buy the property personally or through a company?

No. Whether a personal name, joint ownership or a limited company suits the client depends on their tax position, their other income and how they want the property to pass on. That is regulated or specialist advice for E&G. You place the lending on whatever basis is decided, and when the decision needs advice, you make the introduction.

The client already has an accountant. Do they still need E&G?

Often, yes. An accountant handles the tax return and compliance for the property. E&G advises on the pension, the investment of any surplus, the protection and the estate plan around it. If the client is already well served, they commit to nothing by taking a first conversation.

What do I earn from a second-property introduction?

You share in the initial advice income and in the ongoing value of the assets E&G comes to manage for your client. Terms are agreed individually and are not a guarantee of income. The value recurs over time after the mortgage completes.