Second Homes
Jan 02, 2012

"Second Homes -- can this aspiration become a vibrant industry?"

With increasing affluence on the one hand and a growing realization that there is a need for a relaxed lifestyle -- at least on weekends -- the concept of "Second Homes" appears to be gaining popularity.

According to the National Council of Applied Economic Research, the number of households described as “rich” have risen from 3m in 2003 to 11m by 2013. Meanwhile, the number of middle class “aspirers” is predicted to leap even more dramatically, from 46m to 124m. The number of HNWIs in India is growing at 20% a year, second only to Singapore.

This growing opulence of Indians surely makes the second-home market pretty hot. According to a study conducted by, a Bangalore-based E-business consulting firm, second-home sales in India increased by 50 per cent from 2002 to 2007. The trend slowed a bit in 2008, mostly due to the economic woes of the US, but has again picked up since mid-2010. Now it's a normal, regulated market where good stuff sells very quickly.

Different people invest in a second property with different motives. For some, second home is to have a relaxing place away from the hustle and bustle of city life, extreme heat and the stresses of work. There are many who’d like to have a second home to spend the rest of their lives in, post-retirement. Others invest in a second home in order to earn rental income.

The primary reason for buying a second home is still lifestyle among Indians; however people have started realizing the investment potential, but the investment consideration comes in a strong second place.

According to a 2010 survey by the National Association of Realtors, about 25 percent of second-home owners rent out their properties. The rest use them for vacations and weekends an average of 50 days per year and otherwise, the properties sit vacant. Some 26 percent intend to use their property as a retirement home eventually, where amenities like good hospital or a polyclinic, gated security become essential.

It has become more or less a set pattern now for India’s growing middle-aged people, mainly above 40 years, to consider seriously, buying a ‘holiday home’. In fact, many exhibitions are being organized by builders and developers urging people to go for their second home, a little far away — may be at an hour or two drive — from their homes. 

A second home is not a bad idea. It can serve the purpose of a change from the routine, once in a while, and leave you refreshed and energized. It can also be a wise investment.

Even if buying a second home involves spending a lot more money before retirement, you will be wise to consider it as an investment. If, for example, you buy a second home five years before you retire, you will be able to earn money by renting out your property for the next five years, and cover a part of the mortgage costs.

And it's not only for Indian dwellers. Non-resident Indians are buying this mid-level housing as well. NRIs can easily attain housing in India because they were born there--but they can also buy even if their parents or grandparents were born there.

Many NRIs choose to go back to where they came from, they have dreams of having India as a possible place to retire, where hired maid servants will run their day-to-day tasks while they relax close to friends and family. The home towns where they grew up always have a certain draw on their heart strings.

Some of the important factors that you should consider before buying your second house: 

Purpose of buying a second home: if you are buying it for other purposes, say for spending your vacation then it is wiser to consider the number of days that will be spent there every year and the costs involved in maintaining it while you are there and away. There are also the tax implications to be considered.

Some people buy a second house only to rent it out. This too would attract a tax as the income from rent is taxable. Hence it is better to consider how you are going to use your second house and the financial and tax implications it could have on your budgets.

Location important for capital appreciation

If you are buying a second house for investment purposes, then its location is crucial for capital appreciation. Be it for rental purposes or leasing out or a possible resale, the location of your second house is very important from this standpoint. Investing in a second house that is on a prime location or at least on a location that has a good scope for development in the future is very important.


A second home of any nature is at more risk than a main residence. Because of its occasional occupation format, which will become known locally, there is an increased risk of damage and burglary. This potential may be eased if the property is on a complex that has its own security programme. However, where the property is isolated it will need to be addressed. Make sure that, if security is not sufficient, it is one of the first jobs that you attend to.

Think with your head, not your heart: 

It's so easy to fall in love with a property, but try if possible to keep a rational head about you. That isolated villa might seem like a gorgeous getaway when you are wowed by the views, but when the nearest big shop is several dozen kilometers away it might not seem like such a good idea later. Try to keep in mind all the variable that make a good home, not just what your heart says when it sees it.

Other factors

Apart from the above factors that are second house-specific, there are other common factors that you should consider before buying any number of houses or even buying your first house for that matter.

The price of the property, its location, the reputation of the builder, age of the building, its design and layout, quality of construction and the legal status of the building should be considered before buying the property.

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