Holiday let mortgages vs. buy to let mortgages
With increasingly stringent government restrictions on buy-to-lets, purchasing a holiday home for short-term letting can be more financially beneficial than long-term rentals. Because holiday lets are regarded as a business rather than an investment, you’ll be entitled to many of the tax advantages that landlords no longer receive, including claiming tax relief on mortgage interest, and subtracting expenses such as council tax, utilities, advertising costs, and maintenance fees. Be aware that as a second homeowner you’ll still be liable for the additional 3% stamp duty cost and that your property must be available to let as furnished holiday accommodation to paying guests for at least 210 days per year. Lettings must be agreed for at least 105 of those, which still leaves 22 weeks each year for you to enjoy your holiday home.
Location, location, location
As with any property purchase, location is key. Make sure you research local amenities and transportation links, and bear in mind that if you are buying a small property in a popular tourist destination you will likely face high competition from other holiday rentals. You can set yourself apart by purchasing a larger property that will cater to more guests, choosing a property with a unique history or quirky architecture, or opting for somewhere that has outstanding coastal or country views.
Consider the holiday home essentials
Try to put yourself in the position of your target audience when viewing potential properties. Most holidaymakers will expect a good bed to bathroom ratio, fast internet connection, effective heating system, convenient parking, and private, well-maintained outdoor space to enjoy on long summer evenings. Think about the type of holidaymaker you are hoping to attract – are you looking for young families, pet owners, hikers, or surfers? This will influence the amenities you prioritise.
Factor in property management
One of the disadvantages of holiday homes over long-term rentals is the frequent changeover costs and responsibilities. Enlisting the services of a property management company will take a slice out of your rental profits (typically 15-20%) but will take all the stress out of handling key handovers, cleaning, maintenance, and emergency situations. Don’t forget to factor this in when you are calculating your incoming and outgoing finances.
If you are looking for a holiday home in Cornwall the expert team at Lillicrap Chilcott are happy to provide their local knowledge. Give us a call on 01872 273473 or see our website for current property listings.