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Owning and letting of second homes: what are the drivers? insights from Denmark

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Abstract

Second homes create welfare for the owner who uses the home for own recreational purposes and for tenants when the home is rented out. In addition, second homes typically generate positive externalities locally, such as seasonal job creation. The letting of second homes opens for a more intensive use of the homes and for their importance for a country’s tourism industry. This paper investigates the drivers of the decision to rent out private second homes, an area which is much less studied than second homeownership. The empirical analysis is carried out on survey data from 2386 randomly selected Danish households combined with data from administrative registers. The analysis reveals that the strongest drivers of the decision to rent out are the age of the owner of the second home and the equity of the home. Young households with low equity have a high propensity to rent out.

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Fig. 1

Source: Eurostat

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Notes

  1. The number of all types of Danish dwellings empty and occupied, was slightly below 3 million in 2012. The population is 5.6 million.

  2. Airbnb, founded in 2008, is a rental platform, while, e.g., the platform HomeExchange, founded in 1992, is for exchange of dwellings. Today, Airbnb is much bigger than HomeExchange in all aspects.

  3. The average for the 2 years 2005 and 2009 tabulated in United Nations Economic Commission for Europe (2011) are reported here.

  4. Household heads are the highest income earners in the household. The questions about the second home followed after a number of questions related to the primary home.

  5. In addition, 177 respondents declare that they have (part in) one or more commercial dwelling and/or second home outside Denmark. No information on these dwellings was collected.

  6. The reference group of wealth below 40,000 DKK means basically no liquid assets, because register data of stock and bond value and money at bank is recorded as of 31 December each year and wage is typically paid out on the latest working day in the month in Denmark, thus liquid assets will capture wage payment at the end of December.

  7. 70 % of coop owners and tenants live in high-rise buildings that are typically located in highly urbanized areas.

  8. The word approximately is used in the questionnaire to smooth over actual swings in letting because of low demand in a year, few weeks of letting because of renovation, etc.

  9. 2,046 DKK is equivalent to around 275 euros at the time of the survey. The Airbnb report from 2015 has an average seven day rent of 4391 DKK. While summer cottages are located in the countryside, Airbnb renting is concentrated in major Danish cities.

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Authors and Affiliations

  1. Department of Business and Economics, University of Southern Denmark, Campusvej 55, 5230, Odense M, Denmark

    Morten Skak

  2. Copenhagen Business Academy, Landemærket 11, 1119, Copenhagen, Denmark

    Gintautas Bloze

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  1. Morten Skak
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  2. Gintautas Bloze
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Correspondence to Morten Skak.

Appendix

Appendix

Table 9 Summary statistics for all households in the survey.
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Skak, M., Bloze, G. Owning and letting of second homes: what are the drivers? insights from Denmark. J Hous and the Built Environ 32, 693–712 (2017). https://doi.org/10.1007/s10901-016-9531-4

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