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People all around the world look into buying a holiday let for a number of reasons, including giving themselves a profitable financial investment, having a second home to allow themselves to get away a few times a year, or even to try and start a new letting business.

Whatever reason you have for buying a holiday let, you are almost guaranteed to reap benefits in many different ways.

The key benefits of buying a holiday let

If you eventually decide to dip your toes into the world of holiday letting and management, you will see that there are several benefits to buying a holiday let.

The unique benefits that you will receive from owning a holiday home will affect you in a variety of different ways. Some are more obvious in that they may help you financially, whereas others will come as a pleasant surprise.

Great Financial Investment

Managing property wealth

A second property is always a great investment when it comes to letting it out to guests. This will help you generate a steady income over your lifetime.

Buying a holiday home in a premium location such as along the Welsh coast, Cornwall or in the Highlands of Scotland, will guarantee that you have high demand for bookings.

As with most properties across the UK, inflation means that your property will always be worth more in the future. With this in mind, even buying a property as a small getaway will prove beneficial financially.

Your Own Holiday Retreat

winter season cottage retreat

Even if you decide that you don’t want to let out your holiday home, you still have the incredible benefit of having a second home to retreat to.

If you have a change of heart and do decide to let your home out, you can ensure that time is available to you throughout various points in the year. This means you won’t have to sacrifice your home entirely.

If this is something that you decide to do, it is important to calculate the potential differences in yearly revenue. The more you spend at your second home, the less revenue you will generate across the year.

How to buy your holiday home

holiday home mortgage

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 hefty 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 look into holiday home mortgages, you will quickly learn that there are far fewer mortgage providers catering for this area.

Not only are there less 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.

Where to buy your 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.


outdoor pizza oven

A seasonal property might not be the first type of holiday home you might think of when you think of buying a holiday let, but certain properties prosper well depending on the season.

Log cabins and similar style cottages perform extremely well in winter periods where people crave the idealistic winter cabin experience. You tend to find cabins with a hot tub 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

holiday home kayaking

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.

Local Events

Local festival

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 that is held in cities such as 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.


Holiday home legalities

Did you know that there are a few holiday let rules and regulations that you need to follow when you let out a holiday home?

When letting out your property, you will become responsible for your guests’ health and safety on top of meeting UK standard regulations for letting out a property. This includes:

  • Making sure that your property is family friendly and safe for children.
  • Eliminating any trip or slip hazards within your property.
  • Ensuring that there is secure hand railing on all stairways.
  • Providing any signed warnings regarding hazards such as low ceilings.
  • Leaving a list of emergency contact numbers for your guests.

On top of regular health and safety, you have to provide adequate furnishing in your property for it to qualify as a furnished holiday let (FHL).


Holiday home property tax

Just like a regular home, you will be required to pay tax on your property. However, although your property is a home just like other, you will be required to pay different kinds of taxes in comparison to your main property.

Council Tax – You will pay less council tax for your second home at a rate of up to 50% less. Be mindful, to be eligible for this type of tax exemption, your property must be fully furnished.
If you want to know more about how much council tax you would need to pay in your area, contact your council to ask for specific details.

Furnished holiday let tax – Did you know that if your property is fully furnished, you could be entitled to a tax relief?

FHL tax (furnished holiday let tax) is a form of Capital Gains Tax relief that alleviate certain tax payments.

Stamp Duty Land Tax – When buying another property to holiday let, you will need to consider the costs of Stamp Duty Land Tax. This form of tax requires the property owner to pay an additional 3% of tax on top of their current rates.

Unlike regular stamp duty taxes, this form of tax applies to the entire purchase of the property.

Income Tax – Any revenue generated from your holiday let will be subject to income tax. However, there is some good news!


Unlike typical buy to let properties, holiday letting does not have a limit on the amount of mortgage you can offset with the profits you make from your holiday let. This is incredibly useful for property owners that have a mortgage on their property.

What are the extra costs when you buy a holiday let?

There are several hidden costs to think about when considering buying a holiday home, some of these include:

  • Maintenance: Maintaining your holiday home is perhaps something that you don’t think about when you are thinking of buying. A thorough clean and check for any damage must be complete after each stay to make sure that your guests have the best chance of a positive experience. This can either be taken out by you personally, or you can use a holiday let management company. As well as this, while having a swimming pool or hot tub at your property will allow you to increase your rates, the maintenance of these also come at the expense of cost and effort.
  • Home security: With your holiday home not being occupied all of the time, home security is something to be strongly considered. Costs for securing you holiday home could be as small as installing external cameras and buying a safe, however those more serious about holiday home safety may choose to install motion sensors, 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 away, however this fee has many advantages, allowing you to focus on giving your guests a memorable holiday while the agency deals with the admin. This is a major factor to think about when you are looking at how to price your holiday home.

Let your property with Sykes and earn up to £125,000 per year*

  • Join over 15,000 holiday properties already working with Sykes Cottages
  • We welcome over 26 million web visitors a year
  • Many of our owners achieve more than 45 bookings a year
  • We specialise in turning your holiday property into a profitable year-round income for you

*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.

holiday let owner pack

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