Holiday home info

andy1991

I'm looking for as much advice as I can possibly get. My mom owns her own home in Devon which she has just recently decided to turn into a holiday home so she can boost her income. She's fully moved out and has handed it over to an agency to take the bookings. What type of mortgage deal fits this bill? At the moment she is waiting for bookings to come in and is juggling the mortgage payments as well as renting a very small cheap flat with only one wage coming in. Her being a proud/stubborn mum keeps a lid on things financially and tells me not to worry but in my head to keep 2 house holds running with the rest of the bills with 1 wage coming in can only make me think she has bitten more than she can chew. So here I am trying to find some more details on how I can help.
So as a re-cap...
What type of mortgage deal is best to get?
What's the lowest she can get her monthly payments down on her mortgage so she can thrive off?
Does she have to notify the lender that it is a holiday home?

Any tricks of the trade or just general advice would be greatly appreciated as I really don't want to see my mom struggle.

Thanks

Andy

davidmcn

andy1991 wrote: »

Does she have to notify the lender that it is a holiday home?

Yes, her current mortgage conditions almost certainly require it to be used for owner-occupation, so depending on how long ago she moved out she's possibly already in breach of those (and she'll need to sort out suitable buildings insurance too).

So she seems to be doing things in the wrong order - she should be sorting out her remortgage first. And I think the options are pretty restricted for holiday homes, as it's more of a commercial enterprise. Sounds like she may struggle to get this if she doesn't have much in the way of spare income or capital - probably one for a broker and/or the Mortgages board here.

eddddy

It's surprising that an agency has taken on the property without doing any checks.

As well as a suitable mortgage and insurance, your mother should have planning consent to do holiday letting for more than 90 days per year.

Getting the insurance sorted is the most important thing. If a holiday guest does something stupid and the property burns down, the insurance company may refuse to pay.

Davesnave

The main trick of the trade is not to play fast and loose with your lender and insurance company, or it could all end in tears.

The problem is that your Mum doesn't own her own home outright, but even if she did, there is a raft of legislation she should be complying with, which if she hasn't fixed the basics, seems unlikely to have been considered either.

It's a recipe for disaster, but if the letting agency are any good, they should be checking stuff like compliance with fire regs etc, which is vital.

Hoploz

This is tricky - there are many hoops to jump through for permission from various sources - lender, insurance, freeholder sometimes.

Has she considered long term letting instead?

We have thought about using our seaside property for holiday letting, but it's just so much hassle what with cleaning in between, problematic tenants (eg drunken holidaymakers/kids/smoking/dogs) that we decided to let long term instead. The initial ££ look enticing but take into account the additional workload, insurances, agency fees, bad reviews when the cleaner doesn't show up between lets, not to mention it being seasonally-dependent income, that it was so much better to just have a guaranteed (pretty much!) monthly rental. And when we got letting agents in we were pleasantly surprised at the rent they could - and easily did - get.

Another thought - I know little about it myself, but if it's a large property would an air-bnb sort of thing be another possibility? This could mean only renting rooms to holidaymakers, or the whole property of course, but if she still lived there then she wouldn't have the additional rent for her own place.

ProDave

I might suggest that instead of a whole house holiday let, run it as a B&B instead. No PP needed if you only let 2 rooms, in fact very little regulation at all for that. Mortgage company would probably be okay. You would need to change the insurance to a guest house policy, but you would have to change the insurance anyway for a whole house holiday let.

If you do that, I highly recommend booking.com, that's where most of our bookings come from. Contrary to popular belief, we don't get many bookings from Air BNB.

Davesnave

It's also worth considering carefully whether Mum's home will rent easily to holidaymakers. Just being in Devon isn't enough.

I'm in a very pleasant part of Devon, right next door to an old farm complex of buildings that were converted to holday cottages in the late C20th.

Today, not one of those properties is rented out as a holiday let; there's too little demand.

Hoploz

Of course, your mum might just tell you to butt out!

She's already taken the huge step of moving out so it looks like she's going to give this thing a go whatever you say. She will have thought hard about it I'm sure.

I think you need to let her give it a whirl, then if things don't go to plan, have these options to suggest to her later as a back up!

G_M

There's loads of information on the web these days.

It may well be that she has already addressed the multiple legal issues like insurance, Planning Permission, mortgage, H&S, tax etc as well as the practical issues of running a business, but for your benefit (and hers if she jumped in without looking):


http://www.landlordzone.co.uk/forums/showthread.php?44490-Starting-holiday-rental-business-advice-please

https://forums.moneysavingexpert.com/discussion/3095492

http://www.whichcottage.com/advice.htm

http://www.sykescottages.co.uk/letyourcottage/

https://www.amazon.co.uk/Starting-Running-Holiday-Business-Start-Ups/dp/1845280393

http://www.holidayletsforsale.com/advice-cottage-owners-info-pack/setting-up-a-holiday-home-or-vacation-rental-cottage/

loveka

You don't need planning permission to have a holiday let.

You can get a special holiday let mortgage. The amount you can borrow is based on the estimated income from the let. The agency she is with will provide a letter for the mortgage company stating the income she is likely to get.

There are only a few lenders that do holiday let mortgages. Principality is one. Do a search , you will find others.

I don't think agencies check anything except that you have adequate insurance and a tv licence. Mine didn't. You need specialist holiday let insurance which includes public liability insurance.

You can apply to pay business rates rather than council tax

hazyjo

Have a good look at airbnb too.

Jx