The changes to the tax treatment of Buy to Let properties over the last 2 years has started to shift growth in Buy to Let properties towards the Holiday Home sector. A trend predicted by many experts once the new tax rules began to be rolled out in 2015 .
It now seems that 2017 will create very healthy conditions for the surge in Holiday Home investment to accelerate. The profit motive for these investments has never been stronger and the economic climate post brexit is ideally suited to encourage holidays in the United Kingdom Both these factors will inevitably lead to more and more investment in Holiday Home accommodation.
The profit motive for this shift in investment exists because Holiday Homes are treated as a trading business and so are exempt from the recent tax changes on Buy to Let investments. As well as this a holiday home can give a substantial annual return in rent if the right location is chosen. The limited stock of Holiday homes in the “right ” locations should also ensure capital appreciation becomes a positive factor in the investors considerations. Its no wonder that many people now see this as a potential retirement investment which will give a good income during retirement.
As with any pot of gold though there are difficulties, financing being one of these difficulties. Obtaining a mortgage on a holiday home often requires some searching among providers. The most difficult to finance are the purpose built holiday homes on leaseholds and many holiday parks now offer their own financing options to overcome this difficulty. Mortgages do exist though and Independent brokers can often assist potential investors in finding the right type of mortgage for their property purchase. of course If the holiday home is a freehold cottage or a house in a tourist location, which could be flipped to residential use then sourcing finance through a mortgage is far easier.
As well as a profit motive incentive the economic climate is also a positive. The fall in the value of sterling against other currencies is expected to create a boom for holidays being taken in the United Kingdom, and the launch of easy to book sites such as Airbnb now makes booking accommodation in a holiday home a simple exercise. So supportive economic conditions, new channels for reaching holiday makers and the tax benefits all make this market a potential hot spot for Buy to Let investment.
This shift in the Buy to Let market was predicted some time ago , in fact almost as soon as the new tax riles were announced, as can be seen in the article on the link below, its just taken a little while to build up a head of steam, and now its moving it does not look likely to halt for some time to come.
Informative article in the Daily Telegraph http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11979388/Why-holiday-homes-will-be-the-next-buy-to-let-boom.html