Buying a park home – is it a good investment?

Moving from a traditional brick-and-mortar property into a park home can be an  attractive option for those wanting to downsize, save money, or retire in a new location.

But before you pack up your belongings, there are a few things to consider. While a scenic location and affordable living is tempting, park homes can often come with unexpected costs and complications.

So, are park homes a good investment? We’ll help you weigh up the pros and cons of park living before you start labelling boxes.

Why buy a park home?

Affordability, low maintenance costs, and a community feel are some of the reasons people step away from urban living in favour of rural park homes.

Affordability

Park homes are cheaper to buy than traditional properties, with prices starting from £25,0001. If you’re entering the property ladder, it’s a much more affordable way to become a homeowner. And if you already have a property to sell, you may save a large sum of money.

Safety and security

Park homes are located in private, gated estates, making them more secure. They’re often monitored by 24-hour security and park managers, so someone is always nearby to keep watch and stop anti-social behaviour.

Low maintenance

Since park homes are often made of timber, they’re lower maintenance than brick properties.2 They’re designed for convenience with fewer rooms and floors, so general upkeep is kept to a minimum.

Low running costs

The materials used to build park homes also means that they’re cheaper to run. Timber keeps rooms well-insulated, so you may find your park home stays warm even in winter.2 Plus, they can use low-emission windows and doors for greater energy efficiency.

Council tax bills are also usually lower in park homes, so monthly outgoings can be significantly reduced.3

Considerations when buying a park home

Although park homes offer considerable financial and living benefits, they don’t operate like traditional properties. There are other factors you need to consider when buying a park home.

Pitch fees

Although you might own a park home, you won’t own the ground it sits on. Instead, you pay a pitch fee, similar to rent. That means you’ll probably need to pay towards the general upkeep and maintenance of the park community, which could be £1,000-£3,000 a year3 (or more).

Mortgage

Most brokers won’t provide mortgages for park homes because they’re neither a freehold or leasehold property. The site holder is the legal owner of all land where the park is built.4

You may find some lenders that offer loans for park homes, but they typically come with higher payments and interest rates.4 As such, park homes may be better for people who have large deposits or equity.

Commission

If you sell your park home, you won’t keep all of the equity because you aren’t the official land owner. Therefore, you must pay a commission fee to the site owner – usually 10% of the sale price5.

Accessibility

Some park communities don’t offer 12-month residency licences, so you may find yourself stuck if it’s your permanent home. Your site’s licence will state how long you can live there, so check this carefully before signing6.

Do park homes hold their value?

Unlike traditional houses, the lifespan of a park home is usually 50-70 years. As such, they often depreciate in value because their condition worsens quickly, and they need more upkeep.7

However, a well-maintained park home can tell a different story. If it’s built in a sought-after location and sold in a good condition, you may even make money.

The current state of the market also has a lot to do with the value. Like any other property, the sale price of park homes can rise and fall at any time based on factors out of your control.

How much is my park home worth?

A new park home costs around £85,000, although bespoke homes with added extras can be worth over £140,0001.

Pre-owned park homes are typically worth around £50,000, making them very affordable for retiring residents or homeowners with less equity1.

Making money from your park home

If you don’t plan on living there all year, letting out your park home can be an easy way to generate extra income.

Before you turn your park home into a rental property, make sure you’ve considered the following:

  • Location — Tenants will likely pay more for park homes in a desirable location, as well as areas with low crime rates and reduced risk of natural disasters such as flooding.
  • Size — If your property has several bedrooms and sitting rooms, you’ll be able to charge more than a one-bed park home, for example.
  • Age — Newly built park homes are generally higher in value, because they’re more modern and require less maintenance. That means you can usually charge more rent.
  • Cost of letting — You’ll need to factor in maintenance costs, management fees, and general upkeep payments before letting out your park home.
  • Insurance fees — It’s always a good idea to insure your home. Intasure offers affordable, comprehensive park home insurance that is tailored to the unique risks of your property.

Is it worth buying a park home?

Every home has its pros and cons. But, ultimately, it’s up to you to decide whether a park home is a good investment.

They’re affordable, easy to maintain, secure, and make way for modern living in a tight-knit community. But they can lose value quickly, and you may find yourself stuck with extra costs, such as ground rent and commission fees. And if you’re hoping to go down the mortgage route, you may need to find another option.

Overall, though, park homes can be a great option, especially if you’re looking to downsize or move to an idyllic location away from the hustle and bustle. If you’re ready to make the move to mobile living, consider insuring your park home for extra security and protection against damage, theft, and other common risks.

At Intasure, we’re a UK leading provider with decades of experience in caravan insurance. We’ll get to know your property and the many risks you face, so we can ensure you have the cover you need. Get an instant park home quote online, or contact our UK team on 0345 111 0680 for more information.

Sources

  1. onthemarket.com/for-sale/park-home/uk/
  2. outandaboutlive.co.uk/park-holiday-homes/articles/general/constructing-a-park-home-how-is-it-made
  3. reddeervillage.co.uk/faqs/what-are-the-monthly-costs-of-living-in-a-park-home/
  4. parkhomes.lease-advice.org/faq/can-i-get-a-mortgage-to-buy-a-park-home/
  5. parkhomes.lease-advice.org/faq/who-pays-the-10-commission-when-a-park-home-is-sold/
  6. intasure.com/blog/things-to-consider-before-buying-a-park-home/
  7. intasure.com/blog/will-park-homes-owners-rule-this-year/

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Intasure accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.