Climate change and Covid give new allure to staycation lets

STAYCATIONS are still in style even though pandemic travel restrictions have been eased, and millions of Britons would love to take advantage by investing in a holiday let property. Incredibly, 10 million say they would consider becoming a holiday let landlord, with younger people particularly keen.

The research comes from Suffolk Building Society, which saw the number of new holiday let mortgages double last year. It says climate change awareness, travel restrictions and high flight prices underpin the resurgence in domestic holidays, so could you take advantage?

Most holiday let investors target properties situated near the coast, in beautiful countryside, or at the heart of bustling city centres. Devon and Cornwall are favoured locations, followed by the Lake District, Peak District and Yorkshire Dales.

DON’T GET TOO DREAMY

Suffolk Building Society’s head of mortgages Charlotte Grimshaw said many would-be landlords got the idea while holidaying in the UK during the pandemic: “As well as earning income from tourists, they can enjoy the property for personal use too.”

She warned dreamy landlords against getting carried away by the holiday spirit. “The purchase needs to stack up financially too.”

Lenders have different criteria to a standard residential mortgage or a buy-to-let, Grimshaw said.

Typically, you must already own your home, and your holiday let must be considered as suitable security.

Investors will need an average minimum income, between £10,000 and £40,000 a year, depending on the lender.they will also have to put down a deposit of at least 25 per cent of the property’s value.

Buyers will also need to show that rent from the property will more than cover the annual mortgage repayments, with plenty to spare.as a rule of thumb, it should be 145 per cent of your annual mortgage repayments.

“Be prepared to show evidence of rental value in low, mid and high seasons from a lettings agency.”

BE BUDGET WISE

Lenders may not accept properties in holiday parks, caravans or lodges, and those of unusual construction. “Many prohibit properties marketed on short-term lettings sites,” she said.

They may also set occupancy restrictions, restricting the amount of time you can personally use the property each year. Many also set a limit on the number of holiday lets you own in total.

Remember to budget for maintenance, tax, cleaners and gardeners, and specialist holiday let insurance with at least £1million liability cover, Grimshaw cautioned.

After a career in marketing and hospitality, Elaine Sneddon Hughes, 55, is thrilled she bought Horsley Cottage in the Scottish Highlands.

Elaine and husband Stephen, 57, stripped back the rundown threebedroom property to its original stone, installed a new heating system and log burner, and insulated throughout. Like many doer-uppers, they ran over their budget.the renovation cost £35,000 in total but Elaine and Stephen have seen back-to-back bookings for the last six months. “It was a labour of love, but it’s worth it,” said Elaine, who advertises the property through specialist Sykes Holiday Cottages.

HARD WORK’S REWARDS

In 2014, Lisa and Peter Earnshaw swapped Surrey for Umberleigh, North Devon, and ended up becoming accidental holiday letters.

Lisa, 50, and Peter, 53, renovated a property to create the family home of their dreams, including an outbuilding for Peter’s mother to move into.after she decided to stay in her own home, the couple were left with an empty property, and started renting it to holidaymakers.

This showed them just how lucrative holiday lets can be, so they landscaped an adjoining orchard and erected three shepherd huts there. Each has its own garden, hot tub and views over the rolling valley hills.

Lisa and Peter have now added a fourth and fifth, and this year anticipate more than 350 bookings and a £195,000 turnover, using Sykes.

Lisa said it was not in their original plans “but it has been hugely rewarding and we love sharing the experience of living here in thewest Country with our guests”.

“We love to see the reactions from our guests when they arrive.”

Lisa cautions that holiday lets require a lot of hard work and tough decisions: “The trick is to stay focused on giving your guests the best experience possible.”

‘You must own your home, and your holiday let must be considered as suitable security’

TAXING TIME

HM Revenue & Customs has been eyeing the bumper profits many holiday let landlords made during the pandemic.

Owners must make full disclosure of their earnings when filing their self-assessment tax returns, and resist the temptation to under report their windfall earnings. UHY Hacker Young partner Neela Chauhan said: “Landlords who fail to declare unpaid taxes ultimately risk fines and criminal prosecution.”

One benefit is that you can deduct the cost of kitting out your property to a high standard from your pre-tax profits, but as any landlord will tell you, making money from property is no holiday.