Are Holiday Lets worth considering as investments?

by Readers Question

9:05 AM, 20th February 2017
About 2 years ago

Are Holiday Lets worth considering as investments?

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Are Holiday Lets worth considering as investments?

I have a few BTL flats and a couple of shops (ground floor of the flats) which I bought as investments/income generators.holiday homes

I wondered to what extent people go out and buy cottages or whatever specifically to run as holiday lets, or whether most holiday lets are inherited properties or outbuildings in the grounds of larger holdings (farms etc.).

Clearly the void periods will be greater, but the weekly income is higher. I just wondered whether it ends up compensating and being a worthwhile investment. Any insights welcome.

Many Thanks

Gunga Din



Comments

Neil Patterson

9:07 AM, 20th February 2017
About 2 years ago

Holiday lets do fall outside Section 24 but then nearly all new purchases are done in the name of a limited company anyway.

Luk Udav

9:50 AM, 20th February 2017
About 2 years ago

Reply to the comment left by "Neil Patterson" at "20/02/2017 - 09:07":

Holiday lets are in the government's line of fire too. The number of days a property must be let to qualify for being treated as a business has been raised to 105 per annum and ther'e only one way that's going to move in future.. What with the weather in the UK and the madness of penalising parents for taking kids out of school in term time (will little Willy aged 6 really have his GCSE grades ruined by a few days off school?).

I suspect the margins very much depend on where you are. I've only one, In Cornwall. No rates as Small Business Rate relief. One key factor is getting good caretakers/servicing agent.

John Constant

11:26 AM, 20th February 2017
About 2 years ago

If the number of enquiries that we get (as a specialist BTL Mortgage brokerage) are anything to go by, I would say that the number of people buying Holiday Lets are next to none. I think that I had one enquiry last year, and I guess that my colleagues would probably say the same.

However, if this subject has caught your eye, and you are a Holiday Let property owner looking for a remortgage or wish to buy another, please contact us (HD Consultants) via my member profile

James Noble

12:03 PM, 20th February 2017
About 2 years ago

Had one once in Cornwall, and great for the family to use - but management charges were very high - site fees, admin, cleaning and laundry charges very high when rented out. Summer lets just about paid for the annual charges. Not a great investment unless you intend to make full use of it yourself as well.

LVW4

12:22 PM, 20th February 2017
About 2 years ago

Likely to make financial sense only if you have no mortgage. Even then, as others have said, the costs are huge (unless it is part of your larger property e.g. farm ...not legit!!), and if it is not near where you live, you will need a 100% reliable and trustworthy housekeeper, (probably) a gardener, and access to reliable maintenance people. When things go wrong, typically during high season, you have no time to put them right as with a BTL. You have same day change overs, and you will be rented out for entire weeks. Your choice; cancel a week's booking and lose a major lump of profit and risk a bad review which could kill your business, or try to do the work while your guests are in (and hopefully out sightseeing, which rarely works). Just one of the challenges you will face every day! Finally... COMPETITION! airbnb! The market is becoming saturated, so you need to differentiate on quality, services, facilities, and/or location. Unfortunately, people are increasingly looking first at cost on airbnb, and don't really consider the quality. You can use airbnb yourself, but you will then be competing on price with someone with a converted garage or a caravan in the back garden!! They won't pay for a lovely garden and 3 amazing bedrooms if there are just 2 guests looking for a quick stay! The everyday stress can be overwhelming. I hope I haven't put you off!


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