Letting a flat - long-term or holiday let?

2005eyeball

We have a self-contained flat within our house which we'd like to rent out. We're in Devon so in theory a decent holiday location but how do we decide whether to rent this out on an assured shorthold tenancy or as a holiday let? From similar properties, monthly rental on an AST would be around £350/month whereas a holiday cottage may be £325 (based on other local holiday cottages) which would seem to make the holiday option more viable as even renting for a week a month would make more money (given that we could charge more over the summer). But presumably there are other factors to take into account? We'd pay business rates on the holiday rental whereas the tenants would pay council tax & we'd have to do regular cleaning. What else am I not thinking of?

BitterAndTwisted

You'd have regular cleaning for change-overs and much higher replacement costs. Tenants supply their own towels and bed-linen but you'd be buying new possibly every year. Holiday lets will likely require redecoration every winter, too. Plus, you'll be picking up the tab for utilities and people who are on holiday won't be stinting on that. What do you think the marketing costs are likely to be?

knightstyle

We let our UK flat whilst abroad for several years. First as a 6 month tenancy and later as a holiday let with Hoseasons. This meant we could use the property when we visited the UK.
The holiday lets were best for us, had a family member near who was grateful for the extra money for handling cleaning, handovers etc.
Never had any damage, a broken glass was replaced by tenant with a pack of 4, and redecorated the narrow hallway each year as it got marked.
Did the same when we sold the flat and bought a house, best tenants were a team of archaeologists who stayed several times and cleaned before leaving.
So phone someone with a letting property nearby to see if it is viable.
I would recommend Hoseasons, especially if you haven't done this before.

PasturesNew

Difficult one, which depends really on how much effort you want to put in, versus loss of privacy.

Having a tenant living next door can be awkward for many - for them and for you. Indeed, it is often seen as a limited market to find a tenant who wants to live adjoined to a landlord.

Holiday lets bring in a new raft of effort as you need to meet/greet and be pleasant to a constant stream of visitors ... and do all the changeover work (washing, vacuuming, linen changing, counting the cups/saucers, checking they didn't break the bed, etc). I've a friend who rents 4 bedrooms as a B&B and she's had people who were booked in turn up at 2am (expected 10 hours later at noon the next day) simply because "we've arrived and had nowhere else to go". Changeover is a time that can be fraught as those leaving are running late, or stuff broke - and the new people turned up early with a car packed to the gills expecting you'll just "let them in.... bit early ..."

Marketing the holiday let will be the biggest issue - working out whether you'll do it yourself or put it with an agent - and whether the agent's trying hard enough or any good at all.

It's nice to have the privacy of your own home with a holiday let (being often empty) ... but the income's sporadic. Also, what you see others advertising for isn't always the price achieved. I've rented a house advertised at £700 for about £200 before for a week ... and a holiday caravan in peak weeks that could have gone for £500-600 I got for £150.

Personally ... I'd probably go down the holiday let route as it's easier to change your mind at some future point.

Madmel

Holiday lets are more flexible as you can pick and choose the weeks you are prepared to have guests, but as the others have suggested, it is hard work on changeover days.

We are in a similar position in having a cottage attached to our house and we rent it out (also in Devon). We have met some lovely people and have a number of regular guests, one of whom is due later today. However, there are people who are a pain, who break things and don't tell you, then you have six hours to sort it out, which can be a nightmare. You need either to be really handy at DIY or you need professionals you can rely on to come in on a Saturday at short notice.

One factor not yet mentioned is that many of the holiday parks only allow people to live there for 9 or 10 months of the year and we get enquiries from June onwards for long lets, where these people move in for 13 or 14 weeks across the winter. This might be a good "halfway house" option for you in that you get to experience having strangers around but without all the regular changeovers.

There are various advertising options depending on how far you want to remain in control. We use one agency which handles bookings for around 11% of the weekly rental. However, any weeks which we either let privately, via other means or want as holidays ourselves can easily be blocked out using their online tool. We also advertise in the local Tourist Information office and I would recommend talking to them and checking their website to see what the competition is offering and how realistic you are.

Feel free to PM me if I can help further - beds to make up and floors to mop....!

PasturesNew

Madmel wrote: »

... - beds to make up and floors to mop....!

The person I know who runs a small B&B wakes up every morning thinking "beds and bogs" .... it's her phrase - and so part of her life that it's mentioned during every conversation. "Gotta go ... beds and bogs".

Yorkie1

OP, I assume you've already checked there aren't any planning permission issues? If you have a mortgage on the property, that also may be a relevant factor as a BTL mortgage doesn't include holiday lets AFAIK.

Marie27lol

If u also go down the holiday let route, another way to add another £5-10 is to a have a start up pack for their hols


Eg. a basic pack could include bread, marge, milk, eggs, tea & coffee


a more expensive pack to include herbs, s/p, pasta, cheese, oxo cubes, noodles, juice etc. as big / comprehensive as u want it too be - and still make a profit


You could also have a limited stock in case they have forgotten anything and come buy direct from you - it could just be the same brands u use e.g. shampoo / conditioner, toothpaste.


It just this would have been so ideal, for when DH and I went to Tenerife and we weren't driving, so we got picked up and went via supermarket first. which was a bit of a drag...


M

2005eyeball

We're going to apply for planning permission, just wanted some ideas of what to apply for (i.e. holiday let or AST) and no mortgage so thankfully no issues there. Great idea re start up packs, thanks!

catshark88

We've just done the figures as we're thinking if buying a holiday let in Cornwall. I'm still in bed though and don't have the spreadsheet to hand, so forgive me if I forget things!

If a holiday let, you will pay;

Council tax or business rates. Strict occupancy criteria to be met to make business rates and associated tax breaks applicable.

All utilities & people on holiday won't be frugal.

TV license, sky and wifi. Your choice but people expect a lot in their cottages these days.

Agent fees or other marketing, changeover fees, laundry, repair and redecoration.

Accountancy and other professional services fees.

Furniture that meets fire regulations and all mattresses will need to meet a higher safety criteria than for household.

High chair, travel cot, stair gate.

Welcome packs of food/ toiletries.

Breakages and repair.

Also;

In a seaside area, occupancy seems to be about 20-23 weeks if the year, though obviously that will vary. Note that weekly prices plummet when not in school holidays.

You or your agent will be totally on call if anything goes wrong and the guest is unhappy. They've blocked a loo at 9pm, who are they going to call??

We looked at one lovely house by the sea, with a gross income of over £20k and put the figures through a spreadsheet and saw cost after cost bring actual profit to about £3k, a yield below what we could get in the bank, for no risk or effort.

It needs serious thought!

theartfullodger

Be aware that an agreement entitled "Holiday let" set up when you knew fine well - or should have known - the occupants won't be on holiday will actually be an AST - regardless of what the paperwork says. So no eviction by S21 until at least 6 months from start: And if deposit taken but not protected in scheme..
a) Can't issue valid s21 until deposit returned...
b) Tenant can sue you for up to 3x deposit any time up to 6 years from when you should have protected it...