A Guide To Buying A Holiday Let
Are you dreaming of owning your own slice of paradise? Buying a holiday let can offer a unique opportunity for both investment and vacation enjoyment. Whether you're looking for a beachfront villa, a cozy mountain cabin, or a city apartment, this guide will help you navigate the process of purchasing a holiday rental property.
In this article, we'll provide expert tips and insights to ensure that you make the right decisions at every step. From choosing the perfect location to understanding local regulations, we'll cover all the essential aspects of buying a holiday let. We'll delve into the financial considerations, including financing options and potential rental income. We'll also explore the benefits and challenges of managing and marketing your holiday rental successfully.
Benefits Of Owning A Holiday Let
Owning a holiday let can offer a range of benefits that make it an attractive investment opportunity. One of the primary advantages is the potential for generating a steady stream of rental income.
Enjoy your own holiday let
Another key benefit of owning a holiday let is the ability to enjoy the property yourself. When you're not renting it out, you can use the property as a personal vacation home, allowing you to experience the beauty and charm of your chosen location firsthand. This can be especially appealing for those who have a deep connection to a particular destination or who simply want to create lasting memories with their loved ones.
Capital growth
Investing in a holiday let can also provide a valuable hedge against inflation. As property values and rental rates tend to increase over time, your investment can appreciate, potentially resulting in a sizable return on your initial investment. Additionally, many countries offer tax incentives and deductions for holiday rental properties, further enhancing the financial benefits of this type of investment.
A Guide To Buying Your Holiday Home
Mortgage rules change when you are thinking of acquiring a holiday home to let. To mortgage a holiday home to let out to guests, you will need to apply for a ‘holiday home mortgage’.
Unlike typical mortgages, this unique mortgage will require a deposit of anywhere between 25%-35%. On top of this, mortgage rates are typically higher which can put a number of property owners off.
Mortgage Lenders
When you see holiday home mortgages, you will quickly learn that there are far fewer mortgage providers catering for this area.
Not only are there fewer holiday home mortgage providers, the criteria that you would have to meet in order to qualify for this mortgage type is much more strict than other mortgage types.
Stress Test
Most mortgage providers will desire a high income rate from rentals. This can be anywhere between 130% - 150% of the repayment value.
Global Provider
If you’re from the UK and you’re looking to take out a mortgage on a property outside of the UK, be sure to check that the provider has a global presence.
If you’re struggling to find a provider in the UK willing to provide a mortgage on a property elsewhere, get in touch with the providers that are native to where your property is located. Read more about mortgages for holiday lets.
Our free Holiday Rental Income calculator promises to make this process easier for you or you can read our blog on holiday let mortgages here.
Location when buying a holiday home
One of the most important factors to consider when you buy a holiday home is where you are going to purchase your property. Guests will choose to rent your cottage or abode for a variety of different reasons.
Some good holiday let locations in the UK
Lake District.
York.
Harrogate.
Brighton.
Peak District.
Robin hoods bay.
Short-stay accommodations are also in high demand, particularly in urban hubs like Liverpool and Bath, where popularity is on the rise.
Seasonal
Certain properties tend to do better during the different seasons throughout the year.
Log cabins and similar style cottages can perform extremely well in winter periods where people crave the idealistic winter cabin experience.
You tend to find cabins with a hot tub can perform particularly well during winter.
In the same way that some people seek winter breaks, some properties boom in the summer. Properties that host outdoor features such as an outdoor bar or pizza oven tend to perform better over the warmer months over the year.
Wilderness and nature
Some properties attract people for the wilderness that surrounds it. Again, this can be for a variety of different reasons.
Water sports including kayaking, canoeing and paddle boarding are becoming more popular across the UK. Is the property you are interested in situated near a popular river, lake or bay? This could be a unique selling point for your property that could attract the more adventurous guests.
Is the property situated near any iconic landmarks or hiking trails?
Think about how the property could appeal to guests looking to quench their thirst for adventure across the UK’s most picturesque sights.
holiday home kayaking
Local events
Does your property’s local town hold annual events that draw people in from around the country or even the world?
Events such as the Fringe Festival in Edinburgh attract thousands of people from around the world each year. Your home could be hot property during this time.
The UK is home to some of the most bizarrely unique and quirky events on the planet. In Gloucestershire, the event that captivates cheese lovers on a yearly basis is the annual cheese rolling competition on Coopers Hill.
What are the extra costs when you buy a holiday let ?
Maintenance
When it comes to maintaining your property, there are a number of things you need to consider. You will need to ensure that a changeover takes place between every visit as well as cleaning and replenishing any welcome packs or consumables at the property.
Maintenance will also require any repairs that need to be made to the property including any plumbing, electrics or accidental damage.
If you're interested about all things maintenance, there are a number of different ways you can go about keeping your property in tip-top condition. You can speak to Stayful we provide holiday let management nationwide.
Home security
With your property being vacant from time-to-time, home security is something that has to be considered.
The costs of keeping your holiday home secure could be as small as installing external cameras or buying a safe.
For property owners that are more concerned about their holiday home safety can choose to install motion sensors or timed light switches and smart locks, all of which could add up to a fair amount but are ultimately worth it.
Commission
Paying commission is another cost of letting a holiday let that you may not be thinking about when you’re setting out your plan.
It may seem like a negative to give a percentage of each of your bookings. But this fee has many advantages, allowing you to focus on giving your guests a memorable holiday while the agency deals with the admin.
Such benefits include
Exposure to a wider audience
Professional handling of your bookings
Generating more bookings throughout the year
Guest management
Holiday Let income Calculator
Take advantage of our free holiday let income calculator created by Stayful, an holiday let management company with over 5 years experience in the holiday let sector managing properties all over the UK.
Common Questions
How much do holiday let cleaners charge?
In general, holiday let cleaners may charge anywhere from £10 to £25 per hour, or a fixed rate per cleaning visit.
The hourly rate is often influenced by the local cost of living and the demand for professional cleaning services in the area. Properties located in high-cost or popular tourist destinations may command higher cleaning rates.
When determining the cost of holiday let cleaning, it's important to consider the scope of work involved.
Larger properties, or those with multiple bedrooms and bathrooms, will typically require more time and effort to clean thoroughly.
Some holiday let owners may request additional services, such as laundry, linen changes, or deep cleaning, which can increase the overall cost.
Many holiday let owners choose to work with a professional cleaning company or service, which can provide a more comprehensive and reliable cleaning solution. These companies may offer package deals or discounted rates for regular, scheduled cleanings, which can be particularly beneficial for properties that are rented out frequently.
It is advised instead of looking at a charge per hour, to review key things you want the cleaner to focus on per changeover of guest, list that when vetting cleaners and have them charge you per guest changeover, then charge that as a cleaning fee to the guest, keeping things much more simple.
How much do holiday letting agents charge ?
On average, holiday letting agents may charge a commission ranging from 12% to 20% of the total rental income. This commission is usually deducted from the rental payments before they are remitted to the property owner. In some cases, the agent may also charge additional fees for services such as property management, marketing, or maintenance coordination.
Is holiday letting safe ?
One of the primary concerns in holiday letting is the potential for property damage or theft. To mitigate these risks, it's essential to have a comprehensive insurance policy in place that covers your property and its contents. This may include:
Coverage for accidental damage.
Liability.
Loss of rental income in the event of a disruption.
Create clear procedures
Additionally, it's important to establish clear policies and procedures for guest screening and check-in/check-out processes. This can involve requiring security deposits, conducting background checks, and implementing secure key-handover protocols. By setting these guidelines upfront, you can help ensure that your property is only accessed by responsible and trustworthy individuals.
Holiday Let Management
If you are interested in hassle free holiday let management for your holiday let property, get in touch and we can provide expertise on income, occupancy & make your investment hands off.