Tips for looking for a holiday let

gazfocus

_Penny_Dreadful said:

Isn’t the Welsh government cracking down on second homes and holiday lets? 

Indeed, and I would be surprised if similar wasn't done in England at some point. The changes in Wales are mainly around increased Council Tax and having to apply for planning permission to use a house as a holiday let, however, new rules also allow for a furnished holiday let to be liable for Business Rates instead of Council Tax which can be cheaper (though it depends on the number of days the property is let for).

North Wales is where we like to go on holiday as a family hence why we are looking there first, but it's just one option.

anselld

They have made it more difficult to qualify for Business Rates in Wales - 182 days actually let vs. 105 days in England.   Still easy enough if you choose wisely.  And of course "paying" Business Rates is a bit of a misnomer since AFAIK they still have small business relief.

gazfocus

anselld said:

They have made it more difficult to qualify for Business Rates in Wales - 182 days actually let vs. 105 days in England.   Still easy enough if you choose wisely.  And of course "paying" Business Rates is a bit of a misnomer since AFAIK they still have small business relief.

Yeh, 182 days let is going to the challenge I suspect as you never know how well a property will let until you put it out there, especially as a potential newcomer on Airbnb.

The other option we have is buying a house locally to rent out as a rental rather than an holiday let and let an agent manage it. As we wouldn’t need a mortgage, could be a reasonable return, but do quite like the idea of having a holiday home where we can go away ourselves. 

Murphybear

Loza2016 said:

I live in a tourist hotspot in north wales.  Just my opinion but things are dying down here now people are going abroad again. Lots of holiday let’s coming onto the sales market due to the changes to council tax. 

Got a friend who owns a holiday let cleaning business and bookings are down considerably compared to previous years. 

I’ve been looking for a week away in England or Wales for June when the kiddiwinks are safely in school.  In spite of the higher prices virtually everywhere I’ve been interested in is fully booked.  The only places that are not are very expensive.  My budget isn’t rock bottom.  

gazfocus

Murphybear said:

Loza2016 said:

I live in a tourist hotspot in north wales.  Just my opinion but things are dying down here now people are going abroad again. Lots of holiday let’s coming onto the sales market due to the changes to council tax. 

Got a friend who owns a holiday let cleaning business and bookings are down considerably compared to previous years. 

I’ve been looking for a week away in England or Wales for June when the kiddiwinks are safely in school.  In spite of the higher prices virtually everywhere I’ve been interested in is fully booked.  The only places that are not are very expensive.  My budget isn’t rock bottom.  

This is the biggest reason we thought about buying a holiday let. My wife and I are not particularly high earners so we just about manage 1 week away a year, but we're having to sell our old house that we were renting out so will have the equity from that to buy a modest 3 bed outright (or at most with a very small mortgage). We have young kids (6 and 4) so are constrained to school holidays most of the time but if we had a holiday home we could go for weekends whenever it's not booked.

On the flip side if we were to buy a house locally and rent it out, we'd have that extra money to make paying for holidays a bit easier.

picky123

Having had ours for two years, we have learnt so much.

First of all, what is your long term plan?, our 2 bed house is also 2 hours away and we want to have something for our own use when the kids become independent.

We rent it out through a local managing agent, mainly to cover the mortgage and other costs, the mortgage should be paid off in a few years and then I think we might just keep it just for family and friends on a non commercial basis. 

If it is 2 hours away you need a fully managed service (25% of rental) plus laundry and cleaning, neither of which come cheap. This means that you will not be the cheapest and you will be undercut by the owner operators who clean and do their own laundry during the off season. For us this is not an issue, I don't want high heating costs and muddy shoes in the house in winter, but good luck getting to 180+ days occupancy, we struggled over the English 105 day rule this year but finished on 113.

It is also not like letting out a buy to let, if you plan to use it as well, then you get emotionally attached to the house and generally people don't care about things. If you can explain why someone would ignore chopping boards and cut food up on kitchen worktops causing severe damage, please explain to me.

Currently the main advantage of holiday let over buy to let is within the tax regime, being able to offset mortgage interest, capital allowances and business property relief, although any of them could change at the next budget. If you were to be mortgage free, much of the benefit will be lost.

Just to put some example numbers up, our 113 days rental produced:

Income £17.5k after Airbnb fees

After management charges, water, electric, a bit of maintenance, mortgage interest of £6k we will make about £1-2k profit.

I don't regret buying for one second based on the long term plan, but I wont be taking early retirement on it either.  

TBagpuss

gazfocus said:

Murphybear said:

Loza2016 said:

I live in a tourist hotspot in north wales.  Just my opinion but things are dying down here now people are going abroad again. Lots of holiday let’s coming onto the sales market due to the changes to council tax. 

Got a friend who owns a holiday let cleaning business and bookings are down considerably compared to previous years. 

I’ve been looking for a week away in England or Wales for June when the kiddiwinks are safely in school.  In spite of the higher prices virtually everywhere I’ve been interested in is fully booked.  The only places that are not are very expensive.  My budget isn’t rock bottom.  

This is the biggest reason we thought about buying a holiday let. My wife and I are not particularly high earners so we just about manage 1 week away a year, but we're having to sell our old house that we were renting out so will have the equity from that to buy a modest 3 bed outright (or at most with a very small mortgage). We have young kids (6 and 4) so are constrained to school holidays most of the time but if we had a holiday home we could go for weekends whenever it's not booked.

On the flip side if we were to buy a house locally and rent it out, we'd have that extra money to make paying for holidays a bit easier.

Renting out a house locally would mean that you could keep an eye on it yourselves - you could consider whether buying a local BTL and perhaps getting a normal touring caravan or camper van for your own holidays might be the way to go - if you want to regularly visit the same place / area for holidays then you may well be able to arrange  book a regular spot .

I would guess that a holiday let that's suitable for you and your children would also have highest demand during school holidays for other families with children, so if you want to use it you would potentially be using up some of the most popular / profitable weeks when you might otherwise be able to let it out. If you buy somethings that might be more popular year round (say somewhere suitable for a couple or two couples) you may get better occupancy and returns but not have somewhere that is ideal for your own family holidays.

If you do go ahead, then do a lot of research first - read reviews on lettings sites to see what people like and dislike.

One thing I would say, both as someone who has rented properties and as someone who has lived in  / has relations living in places that are very popular with tourists is think about parking.  If I rent, I wouldn't consider anywhere that doesn't have it's own parking, the last thing I want in an unfamiliar place is to have try to find parking, traipse back and forth , worry about how secure it is or have hefty additional cost if everything it chargeable, and one of the things which residents hate is visitors parking inconsiderately all over the place. Also think about the amount of parking in comparison with how you market the property. (a friend of mine lives in a village which has become very popular - there are quite a few properties with no parking or a single parking space, which are marketed as perfect for groups of 6-8 adults, It creates chaos, sadly a lot of people bring a huge sense of entitlement with them on holiday and don't care about being on good terms with the neighbours as they are only there for a few days - if you want to be on good terms with the community where you buy, think about that kind of impact ! Especially if you think you might wan to spend more time there , or retire there, in future! 

gazfocus

Thanks for the super helpful replies @TBagpuss and @picky123.  

Really useful information/thoughts in your replies and one thing I hadn’t considered with a holiday let is leaving us enough time to use it during the peak periods which as you say will impact on the income at the most expensive times of the year, and will make it even more difficult to get across the 105/180+ day minimums. 

We’ve been looking at available properties and I think we are leaning more towards buying a house to rent out rather than a holiday let. Ideally, if we find the right house, we should be able to buy it outright and still have enough to spend doing it up, otherwise we might get a small BTL mortgage to give us the money to do it up. 

This has the advantage as well of removing the need to look in specific areas as, as long as it’s within a reasonable driving distance, it makes no odds to us where it is as long as it’s rentable. 

I’m not sure what our mid-term goal is if I’m honest, but our long-term goal is to grow the pot of money we have available to buy our forever home. 

The main reason we want to do ‘something’ is because if we just sell our house and put the money in the bank, it’s not going to earn much interest and there’s the risk of ‘dipping in to it’ and ending up with nothing left. 

One earlier poster suggested a 2 year bond and on looking online, we could get one at 4% interest per year, but I still think we would be better off putting the money into property as we should get more than 4% yield in rent plus the ‘hope’ that property prices increase slightly by the time we decide to cash out.

picky123

Really useful information/thoughts in your replies and one thing I hadn’t considered with a holiday let is leaving us enough time to use it during the peak periods which as you say will impact on the income at the most expensive times of the year, and will make it even more difficult to get across the 105/180+ day minimum.

This is the most important thing, don't plan on multiple summer weekends as you will never reach the occupancy levels required.

Rather, expect wet and cold winter weekends when you visit to fulfill the insurance requirements of not being empty for more than 45 days.

But for us, it fits our long term objectives, a little pain now, lots of benefit later.