‘Handout homes’ - properties bought by one person for the use of another - are fuelling the UK second properties market, according to the Direct Line UK second properties index, launched in conjunction with the Future Foundation.

The index reveals there are currently 327,000 ‘handout homes’ in the UK. A quarter of these (83,000) were purchased by parents to house their children while students at university - a 26% increase since 2000.

This ‘university effect’ has become a tangible driver of the UK second properties market and is set to continue, with student occupied second homes hitting the 100,000 mark by 2010.

The index, published annually and the first of its kind to chart all UK second properties and not just holiday homes, reveals that the overall market currently contains 2.6 million second properties, up from 2.3 million five years ago. There are currently 24,809,000 homes in the UK in total1.

Categories of second property

• Buy-to-let properties constitute the largest section of the UK second property market with 1.6 million properties currently rented from private landlords (60%)
• Properties inhabited by non-paying tenants such as friends, house-sitters or extended family members - 293,000 (11%)
• Holiday homes - 253,000 (9%)
• Pied-a-terres (bases for work) - 58,000 (2%)
• Properties with no prescribed purpose/unoccupied -100,000 (3%)

Second properties versus first-time buyer homes

Annual growth in the number of second properties will outstrip that of first-time purchases over the coming decade.

• By 2015 the number of second properties will reach 3.3 million, a rise of 664,000 or 25%
• In contrast, fewer than 300,000 first-time buyers will enter the market annually by 2015 - this represents a 17% decrease from today’s figures (364,300).

Holiday home hotspots

Most popular areas for holiday homes include the Scilly Isles, where ‘country getaways’ represent 25% of all housing stock, South Hampshire (11%), Argyll and Bute (11%) and Berwick-upon-Tweed (8%).

Second property occupancy rates

In addition, the index reveals almost two thirds of second property owners never occupy these properties - 60% rent them out and a small minority (4%) leave them empty throughout the year.

The index also reveals that those using their properties as holiday homes spend on average just seven weeks a year in these properties, although 5% occupy them for more than six months.

Burglary and maintenance costs

UK holiday homes suffer around 80% more break-ins than owner occupied homes, which in light of the occupancy rates is not surprising.

Buy-to-let properties are less likely to be burgled than holiday homes. One in twenty (4%) holiday homes have experienced burglary in the past year, compared to 1.5% of buy-to-lets.

The Index reveals average costs for maintenance of second properties vary depending on their purpose:

• Buy-to-lets - £1760 a year
• Holiday homes - £2400 a year
• Other second properties, such as residences for dependants or a base for commuting - £2420 a year.

Andrew Lowe, head of home insurance at Direct Line, commented: "The continued boom in house prices, the rise in parents buying properties for their children and the growth in tele-working are among the key drivers of the UK’s buoyant second properties market."

"Our annual index puts the average value of a second property at £166,000, reaching as much as £249,000 in London compared to £159,000 in the West Midlands and £145,000 in Wales."

"With burglary a real risk for many holiday homes and maintenance costs reaching a high of £2400 each year, owners need to think seriously about properly insuring their second properties and treating them as important assets to be protected, as they would their main homes."