In this two-minute read and a short video, we look at the advantages of buying a holiday rental property.
Planning a foreign holiday over the last two years has taken a lot of patience, caused a lot of frustration, and has seen lots of Brits opting for a staycation.
With amber and green lists changing frequently, mandatory PCR tests, and the dreaded threat of hotel quarantine, the demand for UK holiday rentals has gone through the roof. But are they really worth the investment?
Here are five reasons why buying a holiday rental property may work for you.
๐ญ) ๐๐ ๐ฝ๐ฒ๐ฐ๐ ๐ฎ ๐ต๐ถ๐ด๐ต๐ฒ๐ฟ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐๐ถ๐ฒ๐น๐ฑ
In peak holiday season, holiday rentals can earn more in a week than a buy-to-let can in a month.A decent holiday property can earn as much as an 11% rental yield (according to which.co.uk) compared to a buy-to-let which normally earns around 4 โ 8% per annum. Be sure to do your sums before investing and subtract any agency or mortgage fees before working out your potential yield. Itโs also worth remembering that more expensive destinations offer lower yields.
๐ฎ) ๐๐ผ๐น๐ถ๐ฑ๐ฎ๐ ๐ต๐ผ๐บ๐ฒ ๐ณ๐ผ๐ฟ ๐๐ผ๐
One of the most obvious benefits of a holiday rental property is a ready-made staycation home for you and your loved ones. Keep in mind, to earn the highest income from your rental property during peak seasons, youโll want it rented out rather than staying there yourself.
๐ฏ) ๐๐ถ๐ด๐ต๐ฒ๐ฟ ๐ฐ๐ฎ๐ฝ๐ถ๐๐ฎ๐น ๐ฎ๐ฝ๐ฝ๐ฟ๐ฒ๐ฐ๐ถ๐ฎ๐๐ถ๐ผ๐ป
If youโve got your eye on a holiday rental that requires some TLC, you could enjoy an increase in property value over time and as the destination becomes more sought after. However, if youโre buying in a popular location, you might be paying a premium where prices have already peaked.
๐ฐ) ๐๐ฒ๐๐ ๐๐ฒ๐ฎ๐ฟ ๐ฎ๐ป๐ฑ ๐๐ฒ๐ฎ๐ฟ
Buy-to-let landlords often have to pay out for maintenance and repairs at the end of a long tenancy. However, holiday rental properties are typically occupied for one to two weeks โ so thereโs less time for day-to-day damage. The downside of lots of short-term guests is the need for a management agency to take care of housekeeping and general maintenance. Alternatively, you can manage the holiday let yourself and help guests with any issues during their stay.
๐ฑ) ๐ง๐ฎ๐ ๐ฎ๐ฑ๐๐ฎ๐ป๐๐ฎ๐ด๐ฒ
HMRC considers holiday rentals to be a business rather than an investment, so a landlord can enjoy more tax benefits than a buy-to-let owner. If the property is a Furnished Holiday Let (FHL), you might also be able to claim (limited) mortgage relief. Always speak to a property/finance professional to find out about other tax advantages such as inheritance and capital gains tax and business rates instead of council tax.
๐๐ค๐ง ๐ข๐ค๐ง๐ ๐๐ฃ๐๐ค๐ง๐ข๐๐ฉ๐๐ค๐ฃ ๐๐๐ค๐ช๐ฉ ๐๐ช๐ฎ๐๐ฃ๐ ๐ ๐๐ค๐ก๐๐๐๐ฎ ๐ง๐๐ฃ๐ฉ๐๐ก ๐ฅ๐ง๐ค๐ฅ๐๐ง๐ฉ๐ฎ, ๐๐ค๐ฃ๐ฉ๐๐๐ฉ ๐ช๐จ ๐๐ฉ ๐๐๐ฎ๐จ๐๐ง๐ค๐ค๐ .