Buying a holiday home to let is not just as easy as purchasing a property and the bookings come flooding in, there is much more to it. We have put together this handy guide on how to buy a holiday home to let to help you buy a holiday let that both you and your potential customers are happy with.
Research and planning is the key to buying and letting a holiday home. There are many things to think about, and different perspectives and circumstances to factor in. Ultimately, you want your holiday home to be a mixture of a successful business venture, a place for people to get away and somewhere that you may wish to escape to from time to time.
Discover some tips on what to think about and research when buying a holiday home to let…
Choose your location carefully
The location of the holiday home that you’re buying is just as important as how it looks and how much your rental rates are. There are many other factors to take into account when you’re thinking about the location of your holiday let:
- Choose somewhere popular and desirable – Potential guests are likely to scope out their holiday destination before they look at what style and features they want. Choosing somewhere that is popular and easily accessible is vital when thinking of buying a holiday home to let.
- Is it accessible to all guests? – To reach out to a wide target audience, take into account that some guests may not be able to drive. Check out the local services for buses and trains, and perhaps even the proximity to the nearest airport for any overseas travellers.
- Consider how close you need to be – If you’re looking to complete your own changeovers, want to be on-hand if your guests have any issues or you want to use your holiday home when it isn’t being let out, make sure that you pick a location that is accessible to you or you don’t mind travelling to.
- Think about your target audience – If there is a certain demographic that you want to attract, or perhaps deter, then give this a thought when choosing the location of your holiday let. For example, if young families are your desired guests, choosing a property in the countryside ahead of a city-centre apartment may be favourable.
For more tips, discover the best places to buy a holiday home in the UK.
How to choose your holiday home
Holiday lets come in all shapes and sizes and in every location you can imagine, give a thought to the following when you’re choosing what holiday home you want to buy:
- Preference, practicality and affordability – Once the location of your holiday let has been chosen, it’s time to get into the details of the property’s style and main features. This decision must be based on a combination of what you prefer, what is practical and whether it makes sense financially. For example, if you’re looking for a 4-bedroom barn conversion with a hot tub and a 2-acre garden, could you spare the time and money to maintain it?
- What do customers look for? – Use our handy Staycation Index to figure out which features holidaymakers prefer, and what can bring in more money for you.
- Cover every avenue – When deciding what features you want your holiday home to have, be sure to delve into every detail. Do you want you property to be pet-friendly? Make sure it has an enclosed garden. Do you want it to be wheelchair accessible? Ensure that the property can include appropriate bathroom facilities and access throughout. Will it accept children? Beware of steep steps, nearby water and the distance to the nearest roads etc.
What are the extra costs when buying a holiday home?
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 a managed services team can do this for you at a cost. 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 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.
Holiday Let Taxes and Finances
If you’re thinking of buying a holiday home, be sure to think about and work out what the tax costs on your holiday let are likely to be:
- Holiday home mortgage – When buying a holiday home to let, you must get a holiday let mortgage, often obtainable at specialist building societies rather than your typical bank. You must prove to the mortgage lenders that you are able to create a gross income of 125-130% of your repayment amount. Take a look at our guide to holiday let mortgages for more information.
- Tax – When thinking about the tax on your holiday let, be sure that you are familiar with capital gains, council tax and stamp duty. Browse through our guide to holiday let tax and business rates to learn more. You can also experience tax relief on items such as furniture and insurance, due to a furnished holiday let being a specific classification for rental properties. Our furnished holiday let tax guide offers more useful information.
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