Property has always been seen as a relatively stable investment option in the UK, with people from all over the world putting their money into bricks and mortar. While the most common form of this is buy-to-let, another method that’s proving attractive is purchasing holiday lets.
There are several benefits to holiday let investments, such as the opportunity to have a place to escape to, increased demand, and potential tax advantages — however, it does involve a lot of hard work. But what exactly are holiday lets and why should you bother with them? Read on to find out all the answers.
What is a Holiday Let?
A holiday let is classified as a property that’s rented out to holidaymakers for short periods of time (usually between a few days and a couple of weeks). Holiday let investments are classified as business ventures, meaning they qualify for a host of different benefits, provided you make a concerted effort to make a profit.
Holiday let investment is particularly popular due to the diverse range of potential clientele and locations. Whether it’s a smart city apartment that’s ideal for business travellers, or a quaint seaside retreat for families, the possibilities are practically endless.
Are Holiday Lets a Good Investment?
Holiday let investments can offer significant returns, although they are far from get-rich-quick schemes. There will inevitably be some bumps along the road, and there are a lot of elements to consider before taking the plunge. In some scenarios, they can even be more profitable than buy-to-lets.
Like most business ventures, holiday let investments are not something that should be entered into lightly. There are various pros and cons to take into account, so it’s important to speak to a professional and let them guide you to an informed decision.
Holiday Let Pros and Cons
From burgeoning demand and having a positive impact on the local community, to tax breaks and the chance to be flexible with pricing, there are certainly many reasons that support holiday let investment. That being said, there are also several potential pitfalls to navigate — so it’s important to be aware of everything.
Benefits of Holiday Let Investments
The main benefits of holiday let investment are:
- Income Potential: Holiday lets can produce a higher level of income than long-term letting, provided you can maintain a healthy occupancy rate. You’d also be able to sell your property as a business, thereby benefiting from any increase in value accrued since you purchased the building.
- Flexible Pricing: Owners of holiday lets can change pricing on practically a daily basis, capitalising on time periods where demand would be highest. This is compared to long-term lets which typically have a more rigid structure.
- Tax Benefits: Since furnished holiday lets are classed as businesses, you could benefit from various tax benefits — including Business Relief, Capital Gains Tax Relief, and Mortgage Interest Tax Relief.
- Demand for Staycations: Self-catering holidays in the UK have become increasingly popular over recent years, with the trend showing no signs of abating. Business travellers are also gravitating more towards holiday lets, as they offer a greater amount of home comforts when compared to hotels.
- Your Own Getaway Opportunity: Although it’s a business, you’ll still have the chance to use the property for your own holidays.
- Supporting the Community: Guests staying in holiday lets typically support the local economy more than those in hotels. In addition, you’ll be able to employ local residents and recommend places for guests to explore — providing a further boost to the community.
- You’re Not Alone: While holiday let investments do involve a lot of hard work, there are agencies out there who can take care of some of it for you.
Drawbacks of Holiday Let Investments
Holiday let investment can come with a few potential pitfalls that you’ll need to navigate. These include:
- Inconsistent Income: There’s no guarantee that your property will be let throughout the year, so you may experience days (or even weeks) where you’re not making any money.
- Time Sink: Taking on a holiday let requires a lot of effort. Deep cleans, changeovers, and even maintenance needs to be completed after every stay, while you’ll also have to be ‘on call’ should something go wrong while a guest’s staying over.
- Additional Costs: Owners of short-term lets are required to cover bills such as utilities and council tax, on top of paying for things like maintenance, laundry, and insurance.
- Red Tape: Several local councils and residents are starting to adopt a stance against second homes, with some bringing in new regulations and restrictions.
- Bound By Someone Else’s Schedule: Although you will technically be able to holiday in your own property, you’ll have to fit this time around vacancies, instead of as-and-when you like it. Any time you do take for yourself is also time you won’t be able to make money off your let.
Potential for Unruly Guests: As a holiday let landlord, you’ll be relying entirely on your guests treating your place with respect. Unfortunately, this doesn’t always happen, so you’ll have to do some serious thinking about whether you can cope with the prospect of difficult customers.
Essential Guidance with Holiday Let Investments
If you’re thinking about making holiday let investments, Live Off Grid can help. Our shipping container homes and tiny houses represent a fantastic opportunity to build a sustainably-minded and ethically-conscious business. Made from recycled shipping containers, our buildings can give your customers the chance to take a well-earned break from the rat race and get back to nature.
We’re proud to give potential holiday let owners a platform for their investments to grow, ranging from setting up their own glamping business to purchasing a tiny house on our land and operating it for maximum profit. Our team is also on hand to offer expert guidance on setting up a holiday let business, using our own experience of running a successful company — Shuffle Life.
To find out more about how we can help bring your dreams of holiday let investments to life, check out our blog post on the subject, or contact us today.
