Addressing the ‘D’ Word: Everything you Need to Know About Depreciation

If you’re thinking about purchasing a holiday lodge, it’s important to understand how depreciation works and how it might affect your lodge over time.

What is Depreciation?

Put simply, depreciation is the decline in value of an asset over time. This is a natural process that affects many types of assets, including vehicles, electronics, and holiday lodges. Depreciation occurs due to several factors: age, condition, usage, and changes in market demand.

It’s important to understand that holiday lodges, much like caravans, cars, and motorhomes, are generally considered depreciating assets. They’re designed for leisure and enjoyment, not as primary residences, and their value can naturally decrease over time due to factors like age, wear and tear, and shifts in market demand.

A Familiar Comparision

To illustrate this with a commonly owned item (although not a direct comparison), consider an iPhone. When a new model hits the market with advanced features and cutting-edge technology, the previous version, while still perfectly functional, typically sees a decrease in its sale value. The same can be said for a used or pre-owned iPhone, which sees its resale price reduce significantly.

The same principle applies to holiday lodges. As lodge manufacturers release new models with improved layouts, smarter storage, or more energy-efficient features, older models can start to look a little dated in comparison. Add in natural wear and tear from regular use, and you can start to see how depreciation takes hold.

However, for many owners, the immense lifestyle benefits and the sheer joy a lodge brings often far outweigh this financial consideration.

The Lifestyle Value

Owning a lodge gives you the freedom to escape to a beautiful setting whenever you like, enjoy spontaneous weekends away, spend more time outdoors, and make lifelong memories with family and friends. For many, the enjoyment, relaxation, and time spent with loved ones far outweigh any financial depreciation. In fact, lots of owners consider their lodge to be one of the best decisions they’ve ever made.

Still have questions about ownership or depreciation? Our friendly team is here to help you make an informed decision. Get in touch by clicking the button below.