March 20, 2018 jim1

Holiday Homes, the booming market?

The clear if limited, opportunity in the Buy to Let property market is the growing market in Holiday Home properties.

If you are looking to invest in the Buy to Let market and have decided not to due to the punitive tax changes in recent years, then clearly you are in good company as the Buy to Let market did slow down for a while. Alongside this the impact of Brexit slowed the overall property market as investors wait to see the outcome before making decisions.

This slow down may be coming to a halt now as investors adjust to the new financial climate however when an obstacle occurs you can be sure that people will find the new opportunities the changes create and start to make the most of them.

This year it is estimated that the weakness in Sterling will attract nearly 40 Million visits to the UK, with the cost of holidaying in the UK and the cost of spending when here reduced significantly compared to previous years. As well as bringing in more visitors from abroad the weakness in Sterling would usually lead to more UK residents deciding to take a Staycation in the UK due to the cost of holidays abroad, although I must admit our summer weather does not help this trend.

To this add the explosion in channels through which Holiday rentals can be marketed via sites such as AirBnB and you have a heady mix which is seeing a real boom in demand for and supply of Holiday property for rent.

So the market for Holiday Homes must be booming and in truth if you listen to the major players in UK holiday accommodation it seems this is happening. So it must be a major opportunity for any Buy to Let investor. Usually if reasonable occupancy rates can be achieved the rental return from a Holiday Let can be significantly higher than from traditional lets.

A growing market with good returns must represent a major opportunity. This opportunity of course is not limited to the traditional tourist areas of Cornwall, Devon or the Welsh coast. If you look closely the positive Holiday and Tourist glow is cast over large areas of the country form regions such as Northumbria, Cotswolds, Norfolk and the Highlands to individual towns and cities such as Edinburgh, Chester, Cambridge, York and of course London. So the choice of property investments is broad and very varied.

Into the mix if you look at the Sunday papers and supplements we are seeing an explosion in developments (usually around a lake, so check the midge count first) seeking to take advantage of the Holiday rental boom. These are usually upmarket and offer a fully managed rental service along with full property management. These developments tend to trade on a stunning location, fashionable property, opportunity for owners breaks and of course the return on investment for rentals. One growth area that can be seen alongside the more upmarket developments is the growth in Lodges. As well as usually being priced at a lower level if they are mobile homes they are also exempt from the punitive stamp duty increases. On the minus side mortgages can be difficult and a close examination of any service charges, ground rents or re sale clauses is needed. There is no doubt thought that some of these developments will offer good returns on the investment.

Its probably no surprise that their marketing material also tends to Highlight the considerable financial advantages that short term holiday rental properties hold over the more traditional Buy to Let property. See

There are some obstacle though

The stamp duty issue does not go away, you really have to have done good research on the tourist market in the area you are looking at and it can be difficult to obtain a mortgage on a Holiday Home.

If these are some of the obstacles however they are all issues of course that can be either taken into account during your financial review of the investment opportunity or mitigated in some other way.

As for most property investors the eventual capital appreciation is also a factor I guess that the potential future price rises of property around lakes in the middle of the country may also be called into question. So as with all Buy to Let property investments the key step is research, research and more research.

The conclusion is that any property investor or anyone seeking good returns from a Buy to Let investment would be foolish not to give considerable thought to whether that investment should be in a Holiday rental property.