Many people envisage owning a holiday let but not that many actually go through with the process of purchasing one. For some, it might be a financial risk too far. While for others, it could be concerns about managing lettings and the guests that come with it that are holding them back.
However, if you can’t get the thought of investing in a holiday let out of your head and you just need one more push to get you to sign on the dotted line, then the below should do just the trick.
From the booming staycation trade and restricted tenancy rights to the ability to make use of the property yourself, keep reading to discover the top five benefits of investing in a holiday let.
1. You can make more money
If you are set on investing in property but not entirely convinced that holiday lets are the right move for you, then you will be pleased to hear that this type of property has the potential to make a lot of money.
In fact, according to Which?, holiday lets earn, on average, over 10% yield, with this increasing to as much as 14% over the next few years. Plus, if you manage to secure one of the best holiday let mortgages, you can make your venture even more profitable.
2. Your holiday let will be in demand
Holidays in the UK are becoming increasingly popular, both due to Brexit and the current COVID-19 pandemic. This means that there is likely to be a very good demand for your holiday let in 2021 and beyond.
Furthermore, if you make sure you pick a popular and thriving location, you may even find that there is a shortage of holiday lets in that area, so you will be able to increase your prices and make even more profit.
3. You can enjoy tax benefits
There are several major tax benefits when it comes to holiday let properties that standard landlords do not have the luxury of enjoying. Firstly, HMRC generally regards this type of property as a business rather than a buy to let, so you should be able to claim full mortgage interest tax relief. You will also be able to claim the running expenses of your holiday let including bills and any maintenance costs.
It is possible that you may be able to pay business rates on your property instead of council tax. However, if in doubt, always seek the advice of an accountant.
4. Your holiday let will have restricted tenancy rights
If you have been put off purchasing a buy to let property because you have been worried about problematic tenants who you might struggle to evict, then you should know that this will not be the case with a holiday let investment. This is because holiday let tenants do not have the same occupancy rights as tenants on assured shorthold tenancies.
Plus, holiday let tenants usually pay their rent upfront, so you do not need to worry about chasing up any late payments.
5. You can enjoy your holiday let yourself
Even if you are predominantly purchasing your holiday home in order to let it out, there is no law that says you can’t also enjoy it yourself from time to time. Whether you choose an idyllic villa in Cornwall or a cosy cottage in the Highlands, you can save an absolute fortune on your annual holiday by simply using your holiday let property instead of going abroad.
What to look for when buying a holiday let?
If you want to maximise your property’s potential in the holiday let market, there are several factors that can help to make your property more likely to succeed as a long-term investment.
These include:
- The right location. If you are trying to decide between the countryside and the coast, you should know that coastal properties are consistently in demand in the UK.
- A hot tub. Sales of hot tubs have soared by nearly 400% in recent months, and nothing quite says a holiday like a relaxing soak under the stars.
- Stunning scenery. For those that live in a city, having stunning surrounding scenery is a massive plus point when it comes to holidays in the UK.
- Being dog-friendly. The UK is a nation of pet lovers, so if you are looking for a USP and a reason for people to book your holiday let over others in the area, market your property as dog-friendly as possible.
An open fire. Holidaying in the UK can be a little bit chilly at times, but even the most avid sun seeker will be attracted by the thought of a roaring fire and a nice glass of red.