Purchasing a holiday let in Cornwall

marlowtech

I'm looking to gather some opinions on whether or not to purchase a 4 bed house in a well known Cornish village.

In order to pay for it, we would look to let it out for people holidaying in Cornwall. I've had two lettings agents look at it, and they both reckon it (just) washes its face if everything goes well, but if I put a pessimistic hat on, the rental income won't pay the mortgage and running costs totally.

So, then it comes down to whether the place is going to go up or down in value. I know that no one has a crystal ball, (I've been predicting prices dropping by at least 20% for the last 2 years and getting it wrong), but what's the consensus.

Thanks in advance...

silvercar

Can you afford to pay towards its running costs? If you are in a position where you can afford to support it and won't be forced to sell it at anytime I would think it would be a good bet.
As long as you are not putting yourself in the position where you are forced to sell at the time of a property downturn you should be alright. If you know you can always keep it going until the market turns a corner you should be OK. The extra risks are government taxes on second properties.

marlowtech

silvercar wrote:

Can you afford to pay towards its running costs? If you are in a position where you can afford to support it and won't be forced to sell it at anytime I would think it would be a good bet.
As long as you are not putting yourself in the position where you are forced to sell at the time of a property downturn you should be alright. If you know you can always keep it going until the market turns a corner you should be OK. The extra risks are government taxes on second properties.

Yup, if there's a downturn we could fund it for a while. Having said that, there still seem to be a lot of doom mongers who think proeprty is going to fall considerably. That would not be good!

I guess the question is, do you think property on the coast in Cornwall is going to fall, stay the same, or rise?

Thanks for your response...

dchurch24

Ultimately - we live on a small overcrowded island where people outstrip housing.

In the long term it is my belief that you would always win out of property.

Bexbox2

Hi Marlowtech

Just a word of advice, do you homework on this 110%. I lived in Cornwall for nine years, my fiance had holiday lets on the south coast and although they can pay very well it is definalty 'swings and roundabouts'. Because they were on the coast maintenance costs are very high and rates and amenities are also very high in Cornwall.

Please be very careful, especially if you are moving to the area, work is very sparce apart from seasonal and the weather certainly isn't as good as everyone thinks by far!

Good luck,

Bexbox1

Ian_W

I don't usually DO - are prices going to drop? - threads anymore, circular arguments and entrenched views [mine included] are all that result. However, yours interests me because of the Cornwall connection. We're looking for a holiday home there so I've been following prices and sales fairly keenly.

Funny market there. Very high prices and very low local wages would suggest to me that if anywhere was going to crash first, somewhere that relies on second home buyers spare cash or released equity would be the likely starter. Early last year seemed very slow with plenty of property hanging about but from late summer onwards anything decent with a bit of character has been moving pretty swiftly. The stuff that is sticking is either newer build which won't generally appeal to 2nd home owners or very much, and quite clearly, over-priced for what it is. We've been down viewing 4 or 5 times over the winter and on each occasion at least 1 property has gone under offer between arranging the visit and actually attending.

So to me there is no sign of a crash in Cornwall ATM. That doesn't mean there won't be one next year, year after or whenever, I don't know when and no-one else does either. If you're intending your purchase to be for at least 5 years or better still 10+, then I think it's extremely unlikely you'll lose money - if it's less than that I wouldn't advise anyone to invest in bricks and mortar because of the taxes and legal costs involved.

BTW I wouldn't rely on letting agents estimates, as bexbox says you need to research carefully. We've stayed a quite a few nice cottages where the guestbook indicates only 10/15 weeks let a year. We've had a holiday let abroad and with that experience I've done our budgeting on 18 weeks[/ends] a year only. If they're basing their break even on more than that for the first year at least, I'd be very wary.

BoL, you never know - we may be neighbours soon!!

marlowtech

Ian_W wrote:

I don't usually DO - are prices going to drop? - threads anymore, circular arguments and entrenched views [mine included] are all that result. However, yours interests me because of the Cornwall connection. We're looking for a holiday home there so I've been following prices and sales fairly keenly.

Funny market there. Very high prices and very low local wages would suggest to me that if anywhere was going to crash first, somewhere that relies on second home buyers spare cash or released equity would be the likely starter. Early last year seemed very slow with plenty of property hanging about but from late summer onwards anything decent with a bit of character has been moving pretty swiftly. The stuff that is sticking is either newer build which won't generally appeal to 2nd home owners or very much, and quite clearly, over-priced for what it is. We've been down viewing 4 or 5 times over the winter and on each occasion at least 1 property has gone under offer between arranging the visit and actually attending.

So to me there is no sign of a crash in Cornwall ATM. That doesn't mean there won't be one next year, year after or whenever, I don't know when and no-one else does either. If you're intending your purchase to be for at least 5 years or better still 10+, then I think it's extremely unlikely you'll lose money - if it's less than that I wouldn't advise anyone to invest in bricks and mortar because of the taxes and legal costs involved.

BTW I wouldn't rely on letting agents estimates, as bexbox says you need to research carefully. We've stayed a quite a few nice cottages where the guestbook indicates only 10/15 weeks let a year. We've had a holiday let abroad and with that experience I've done our budgeting on 18 weeks[/ends] a year only. If they're basing their break even on more than that for the first year at least, I'd be very wary.

BoL, you never know - we may be neighbours soon!!

I completely agree with your comments...particularly about the lettings. We'd certainly be looking to hold on for 10 years plus, but it wouldn't be great to find things had plumetted in 2 years time and we could have had a pick of bargains.

I've been thinking for ages that this situation would arise, but now I just can't see it. I'm sure there is a lot of people who are waiting for some great opportunities to appear on the property market and this pent up demand is preventing any real reductions.

Who knows...thanks anyway and I'll see you for a pint of Tinners!