You must plan for all seasons if you buy a British holiday let
IF you’re lucky enough to own a second home in the UK, you’ve probably considered renting it out as a holiday let.
The appeal is clear – not only do you get a higher rental rate per week than a residential let but, as the owner, you can also make use of the holiday home yourself.
Three-bedroom holiday homes in popular tourist spots regularly charge upwards of £600 per week during peak times. That’s a healthy income , especially if you’re not having to service a mortgage on the property.
As with most things, however, it’s not without its hassles. The number of holiday lets in Britain has rocketed in recent years which has meant stiffer competition and more demanding guests. And, unless you live close by, you’ll also have to employ help to keep on top of the constant cleaning and changeovers, manage the guests, and take bookings.
So, if you are thinking of renting out an existing property, or investing in a holiday home for the first time, what are the issues to consider?
Get the right location. British holidaymakers still tend to take their main holidays abroad. It’s vital, therefore, you corner the ‘long weekend’ market and choose a holiday let in a pretty rural area not too far from a big city or train station/airport.
Do the sums. Can you earn enough from rental income to cover your outgoings including the mortgage? The typical occupancy rate for a UK holiday let is between 20 and 24 weeks a year.
Remember you charge different rates for high season (school and public holidays), mid season (from mid April to mid October excluding holidays) and low season. It can also take a few years to get established, even with a popular holiday letting agent.
Get the right house. Large properties can be difficult to let. A two or three bedroom property is ideal as most UK holiday lets are young families, couples or small parties of friends.
Get help. Strongly consider employing a letting agent to take care of the holiday let. They’ll take care of advertising, deposits, payments, cleaning and maintenance. Expect .to pay around 20-30 per cent of the annual rental income, more for the big players.
Get a website. Whether you are employing a letting agent or not, get yourself a website. Most holiday makers like to see where they are going before they book – the more pictures, local attractions and visitor information the better. Creating an attractive, welcoming website isn’t as hard as you’d imagine – sites like moonfruit.com let you do it for free as long as you buy your own domain name.
The right decor. Out with the horse-brasses and Artex. Most holiday letters want a more modern, tasteful approach on country interiors. Get some ideas from magazines such as Country Living or Period Living, both of which hit the right tone. Repaint every year and update the furnishings every three to five years, depending on wear and tear.
The right facilities. Holidaymakers expect a certain level of facilities, even in a rural cottage. Digital TV, DVD, music player and dishwasher are standard. If you want to let to young families, don’t forget fire guards, high chairs, cots and stairgates.
Safety first. All equipment should be safe, clean and fit for purpose. Fire regulations also mean that extinguishers and flame-resistant furniture are compulsory.
The right insurance. It’s absolutely essential you are fully covered. You need to have building and contents and public liability, as well as loss of rental income cover and cancellation insurance if you need a guaranteed income every month.
Tax. The rules for furnished holidays lets are different from residential lets both in terms of capital gains tax and income tax. Get a good accountant to guide you through the tax planning.