The Daily Telegraph - Saturday - Money
As demand rises, how you can make the most of the staycation surge
The surge in staycations means it is boom time for investors in holiday home hotspots. But coronavirus has divided Britain’s short-term lettings market in two.
Travel restrictions and quarantine measures mean rural holiday homes are hugely popular. In some parts of the country, owners have had nearly 10 times as many bookings as they had last summer.
In cities, however, the pandemic has destroyed consumer demand. Domestic interest in city breaks has shrivelled and many international tourists are not able to travel. VisitBritain, the tourist board, has forecast a 73pc drop in inbound tourism in 2020 – equivalent to a loss of £24bn in spending.
How do you make the most of the circumstances and invest?
RURAL BOLTHOLES
As demand rises, lesser-known destinations are moving on to the map. In the district of Redcar & Cleveland in the North East, there were 123 bookings for Airbnb properties for August this summer, up from just 12 in the same period in 2019, according to AirDNA, an analytics company.
In North Norfolk, the number jumped from 147 to 1,066. Pembrokeshire reservations rose from 187 to 1,246. Investors who were initially crippled by lockdown now have a windfall. For some, these new opportunities are proving a lifeline.
Two years ago Aimee Rowe-Best, 32, bought her first home – a £230,000, two-bedroom cottage in Charlestown, Cornwall – with her partner, Jack Blackler.
The house had been uninhabited for 60 years and had no central heating. They spent £45,000 on renovations, doing most of the work themselves over a year.
Then came the pandemic. Ms RoweBest is a freelance travel PR, while Mr Blackler runs an outdoor events company.
“The travel industry fell off a cliff and this whole season from April to October evaporated,” said Ms Rowe-Best.
They decided to convert their home into a holiday let and moved to temporary accommodation at a local campsite. They spent £700 to prepare the property.
They listed it on Airbnb in mid-June and within five days July and August were almost fully booked.
In the three-month period since lockdown eased on July 4, the cottage will have brought in £10,000.
Ms Rowe-Best charges £200 per night for the property. They do the cleaning themselves but pay for a laundry service. Her estimated costs per booking are about £100, including PPE and a welcome pack.
“It was an experiment for us because the pandemic forced our hand financially, and now it has taken the pressure off,” said Ms Rowe-Best.
WHERE TO INVEST
The stamp duty holiday means buying costs are lower so now may be the time to invest.
According to AirDNA, the markets with the biggest imbalances between supply and demand for holiday lets include Scarborough in North Yorkshire and South Lakeland in Cumbria.
In South Lakeland, the southern part of the Lake District around Kendal, there was a surge of bookings when restrictions were lifted, with 4.24 for every active listing, according to AirDNA. The average daily chargeable rate is £135.
Graham Wilkinson of Lakelovers, a local holiday home letting agency, said a key draw for investors was the area’s year-round appeal.
“The average UK property is booked for 25 weeks in a year, but in the Lake District it’s 36 to 38 weeks. In Ambleside it’s 45 weeks,” said Mr Wilkinson.
The village is the heart of the area’s holiday let market, closely followed by Windermere. The average house price in South Lakeland is £238,420, according to Hamptons International, the estate agency. But holiday home investors will need to spend more, said Mr Wilkinson.
The entry-level price for a marketable two-bedroom cottage is £350,000 but “there’s an over-supply of small properties; bigger is better”, he added.
“If you can get a three-bedroom, three-bathroom property that sleeps six, that’s the real sweet spot.”
Budget at least £550,000 for your investment, and you’ll have a property that will bring you a gross annual income of £50,000, although you will spend half that on cleaning and maintenance.
GAMBLING ON THE CITY
Before coronavirus, London and Edinburgh were the biggest short-term lettings markets in Britain.
Glenn Ford of Edinburgh SelfCatering, a holiday lettings company, said: “Properties, especially in the city centre near the Royal Mile, were occupied for 90pc of the year. You would earn one-and-a-half times what you would from residential letting.”
In June the total number of booked entire home listings on Airbnb in London was a tenth of the level in the same month in 2019, according to AirDNA. As a result, short-term lets flooded the mainstream rental market.
Ana Freccia, who runs YourHouseLondon, a property management agency, said owners now needed to be versatile. “You always need a second option, a plan B,” she said.
Mr Ford said he hoped that bookings would pick up towards winter and last-minute bookings were already spiking.
But the pandemic is not the only problem. London has a 90-day per year booking cap and Scotland is introducing a licensing system from spring 2021 under which local authorities can introduce controlled zones and review taxes on holiday lets. “I think you’d be mad to invest in short-term lets in Edinburgh now, not because of Covid but because of the council,” said Mr Ford.
‘The pandemic forced our hand financially, but now it has taken the pressure off’