APPRAISING THE IDEAL HOLIDAY PROPERTY
Published 25 August 2017
For many small-scale property investors, long-term residential buy-to-let has been seen as the default option for some time. But many investors are starting to consider the alternatives – and furnished holiday letting is increasingly coming into the equation.
There are two reasons for this. The first is a tightening of tax breaks for residential buy-to-let landlords. Higher rate tax payers will no longer be able to receive tax relief on mortgage interest at their highest tax rate; the 10 per cent allowance for wear and tear has been abolished; and the increase in stamp duty on the purchase of second homes has also hit revenue.
At the same time, the weakness of the pound has seen a boom in staycations, and the market for furnished self-catering holiday accommodation is extremely buoyant. The opportunities to achieve a higher yield is tempting many from the residential buy-to-let market into the holiday lettings market.
If you are considering such an investment, then choosing the right property to invest in is vital. Much has been written about what makes the perfect residential buy-to-let property, but when you are appraising a potential investment property with holiday letting in mind, the criteria are somewhat different. So what does the ideal holiday let look like?
First of all, think about the ideal size. Whilst there is a demand for larger family properties, they appeal to only one part of the market; for the widest appeal, two and three bedroom properties are best, as these will attract both families and couples.
Then, of course, comes location. It doesn’t necessarily have to be right on the beach, but the ideal holiday let will be within striking distance of facilities such as pubs, restaurants, attractions and shops. Although don’t rule out the more isolated properties which will appeal to stressed out city types looking for a complete escape.
Far more than in residential buy-to-let, aesthetics count in holiday properties. You are selling a dream, and your property has to sell itself from the brochure page or the website. In reality, few of us would want to live in a roses-round-the-door cottage permanently, but it has a huge appeal for a short stay.
People often ask whether holidaymakers are seeking traditional or contemporary properties. The answer is a little of both – ‘charm and character with a contemporary twist’ is a good description of the ideal.
Bear in mind that you are going to be more responsible for maintenance than in a residential let, so choose a property which will be easy to keep in good condition. Your customers are seeking the holiday dream, and they will have low tolerance for any shortcomings
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