Money Investors smell profit as holiday let market ‘goes a bit berserk’

Demand for properties in British tourist hotspots is booming, writes Melissa Lawford

Investors are snapping up holiday homes to capitalise on a surge in British summer staycations. Demand for property rentals has exploded as lockdown eases but uncertainty remains around the future of international travel. As a result, inquiries from investors to buy such properties have surged by as much as 300pc in some hotspots.

While holiday let owners have endured a catastrophic three months of cancellations, they are now poised for a summer boom. Bookings for holiday homes between July 1 and Aug 31 this year are already 156pc higher than in the same period last year, according to Holidu, a holiday let search engine. In east Devon and St Ives in Cornwall, bookings are up by 263pc and 262pc respectively.

Simon Foster of Savills, an estate agent, said: “Clearly, the market has gone a bit berserk.” Typically, holiday home occupancy rates are at 60pc in England and 55pc in Scotland, he said, but over the summer they will increase “by at least 10 percentage points”. “The more occupancy, the bigger the profit margin,” he said.

Property markets in many tourist hotspots are booming. Duncan Ley of Humberts, another estate agency, said holiday home buyer inquiries in Cornwall were 300pc higher than last year. Buyers want a home to use and rent out so it can “pay for itself ”, he said.

In north Norfolk, which has Britain’s second-highest concentration of second homes – a total of 9.9pc, according to analysis by estate agency Hamptons International – buyers are also moving in full force.

Tim Hayward of Jackson-Stops estate agents said inquiries for holiday homes in the area were 40pc higher than last year. Holiday home buyers account for more than a third of the market in north Norfolk, he said. Demand is highest for the stretch of coast around Salthouse, where three-bedroom cottages cost between £350,000 and £650,000 and can earn investors yields of 5pc-8pc on the short-term lettings market.

Buyers from London, the Home Counties and the Midlands are looking for investments in place of the uncertain stock market and low interest rates, said Mr Hayward. Many are also looking for “bolt-holes for the next lockdown”.

Ben Morgan of Bradleys estate agents in east Devon said the number of inquiries for holiday homes was 25pc higher than last year, while sales in June were 15pc higher across the South West. The holiday let market is an attractive alternative to buy-tolet, which is suffering from the economic fallout of coronavirus as many tenants cannot pay their rent.

While holiday lets are subject to the 3 percentage point stamp duty surcharge, the tax regime is less severe than for buy-to-lets and many have more attractive yields than long-term rental properties. Cathy Winfield, 58, had made an offer of £293,000 on a house in Devon before lockdown.

She had planned to let it out when she wasn’t using it as a bolt-hole. She pulled out of the transaction when lockdown began. Now she is wondering if there might be a new opportunity to take advantage of the demand for staycations. Ms Winfield is still wary of the coming downturn, so she plans to wait.

The new demand for British holiday lets is likely to be sustained, said Mr Foster. “There was a growing trend for domestic tourism anyway before coronavirus, partly because of Brexit and

The rise in demand for holiday homes in Cornwall compared with last year, according to one estate agent

‘Buyers want a home they can use then rent out to make it pay for itself’