Next week the schools break up and it looks set to be a staycation summer for many, as EU customs queue chaos and the British heatwave run and run.Some British families will be heading off to their holiday cottage or lodge, while others might be renting one for a week or two, especially in seaside towns such as Scarborough and Salcombe with high proportions of holiday homes.But while the ultimate convenience might be rocking up to your own home, your paddleboards and beach towels ready and waiting, owning your own holiday property now comes with much higher costs than a decade ago, a fact shown in the drop in the number of UK second-home owners, and a glut going up for sale.Changes to stamp duty – a surcharge for additional properties was increased from 3 per cent to 5 per cent in 2024 – and also 100 per cent council tax premiums for second-home owners in some English councils, have made ownership more expensive. On top of the extra taxation are the increased costs of renovation, and higher energy bills.A survey by Sykes Holiday Cottages has found that 71 per cent of homeowners who don’t let out their properties are thinking of doing so – so what are the true costs of ownership to consider?Research from Equity Residences, a property co-ownership fund, suggests that buying a second home in the UK for £2million can mean £1.2million of additional costs within five years, consisting of £370,000 in acquisition costs (stamp duty, legal costs and a survey) and £83,000 in annual running costs (including council tax) with an extra £450,000 lost that might have been invested in ten-year gilts over five years.This is before exit taxes, estate planning, renovation or furnishing costs. A higher-rate taxpayer selling after a £400,000 gain could face an illustrative capital gains tax bill of around £96,000, while a single owner could face potential inheritance tax exposure of more than £670,000 on a property in the £2million-to-£5million range. Tim Milwood, right with his husband and two children, owns two properties in Weymouth, Dorset He lets Wolf Cottage out through Sykes Cottages, who manage the propertyThese are big numbers (and estimates) on a high-end property, but on a more typical holiday home, what sort of costs are realistic?Tim Milwood, who owns two properties in Weymouth, Dorset, has shared the costs of running a holiday home – and also how letting it out covers costs, with some left over.He used an inheritance from his mother to purchase Wolf Cottage, a three-bedroom, two-bathroom property near the harbour, in 2022. It was ‘tired and dated’ and cost £250,000.What began as a holiday home for him and his husband David and their two children, became a successful holiday let, achieving 80-90 per cent occupancy (through Sykes Cottages). Even after renovation costs, this means a yield of 10 per cent.Each year the costs are £4,000 on utilities, £1,000 on insurance, £6,000 on maintenance, £1,000 on accountancy and professional fees, plus high turnover of short-break guests: £12,000 on changeovers, £8,000 on commission to the letting agent, and £1,000 in guest hampers.The couple pay business rates rather than council tax and end up with £40,000 gross annual profit. They achieve the same with a second property, Otter Cottage, that they started renting last year, which they hope will help fund an early retirement.Tim, 43, who works in advertising, says: ‘We are very hands-on, despite our day jobs, and love welcoming guests. We factor in funds to keep the properties in great condition. Last week a chimney stack repair cost £2,500.’He says that the loss of the Furnished Holiday Lettings tax reliefs last year has ‘tightened margins’. With frequent changes of government, the owners of second homes – often blamed for the issues around local housing shortages – never know what taxation changes might be on the horizon. ‘Understand the costs before you buy and have a contingency fund for nasty surprises,’ he advises.This uncertainty has been seen in Wales, where councils can triple council tax rates for second-home owners. In Pembrokeshire the rate increased to 200 per cent in 2024 but was then dropped back down to 150 per cent last year as it proved disastrous for local tourism.But there’s also the increased stamp duty – known as Land Transaction Tax in Wales – with the tax payable on a £1.5million second home standing at £186,200 – considerably more than the £111,750 for a primary house. Ray and Claire Duckworth have bought a three-bedroom lodge at Dylan Coastal Resort in Carmarthenshire, south-west Wales After being deterred by the ‘hidden costs’ of buying a quaint holiday cottage for years, they loved the idea of having fixed bills every year In nearby Tenby, a lot of second homes are now being put on the market, a local estate agent says‘In Tenby, a lot of second homes are now being put on the market,’ says Carol Peett, the founder of West Wales Property Finders. ‘It has been devastating for the local economy, while for owners, having a holiday home might only be profitable if you own it for the long term.’The owners of lodges and caravan park homes do not pay council tax, but could this type of holiday property be more affordable to own?Claire and Ray Duckworth from Staffordshire think so. They have bought a three-bedroom Luxury Lodge at Dylan Coastal Resort, in Laugharne in Carmarthenshire, where contemporary-style homes cost from £375,000.After being deterred by the ‘hidden costs’ of buying a quaint holiday cottage for years, they loved the idea of having fixed bills every year – and a stress-free means of recouping these.They pay £13,000 a year – a £10,000 service charge, £2,000 for utilities and £990 for water and sewage.‘We will earn back the money we paid for the lodge in 13 years,’ says Ray, 63, now a grandparent. ‘We didn’t set out to buy on a park but living in an old farmhouse with nine fireplaces I spend my life fixing things so was very wary of giving myself even more. Plus, the million-dollar views from the lodge were also hard to beat!’The couple love walking, visiting the on-site spa and restaurant mostly in the off-season, and will use their home for up to three months a year, while renting it out during peak summer weeks. ‘This easily covers our costs.’The resort takes 30 per cent of the net rental income for managing the property, where annual occupancy is 80 per cent. That the property – on a 100-year lease – may depreciate in value does not bother them: ‘We will pass it down to the family.’