The popularity of holiday homes in the UK is on the increase not only for the owner`s sole use but also by way of letting, thus creating an additional income.
As with any property purchase, location is critical when choosing a holiday home; arguably more so when the need to consider its letting potential is factored in. Coastal regions are ever popular with families, primary examples of which are Devon and Cornwall, the North Yorkshire Coast with Kent and East Anglia becoming increasingly popular. Classic English Country Cottages are to be found in various regions of Yorkshire, the Lake District, Wales, The Cotswolds and Scotland, all of which have long proven popular with those looking to let a holiday home.
Buying a second home to let needs planning and there are numerous factors to consider.
When calculating a rental income, all costs need to be considered to ensure that your new endeavour is actually profitable. These are far from restricted to any mortgage payments and include utilities, Council Tax and TV licence. A good quality internet connection is also increasingly expected in holiday homes, particularly by families with teenagers wanting to keep in touch with friends. Remember that as with any other business venture, any net income from your property will be subject to tax.
There maybe tax advantages if your property qualifies as a furnished holiday letting. Profit on furnished holiday lettings is calculated in the same manner as that for other rental income, except that you may claim `capital allowances` rather than a `wear and tear` allowance. Examples of expenses that may qualify for capital allowances include the cost of furnishings and furniture and equipment such as refrigerators and washing machines.
To qualify for as a holiday home letting, the property must be in the EU; furnished; available for commercial letting to the public as holiday accommodation for at least 140 days a year; commercially let as holiday accommodation for at least 70 days a year (the rent must be charged at market rate – not at discounted rates to friends and family)
The holiday lets must be (both) short term lets of not more than 31 days and they must be the ONLY form of lets for at least 210 days (211 days in a leap year)
You cannot let the property as a holiday let to the same person for more than 31 days in the year. However, if you meet all the qualifying tests for 210 (or 211) days there are no restrictions on longer lets in the remaining 155 days. But these longer lets do not count as holiday lets.
Seasons will have an impact on rents with school holidays and the summer season driving higher rates not forgetting the Christmas period which is becoming increasingly popular. Peak seasons will vary according to the location, climate and local events with a good range of indoor and outdoor activities rendering a given location more attractive.
The size of your holiday home will also have an impact for letting purposes. Three to four bedroom homes are particularly good for families or groups, whilst one or two bedrooms are good for couples. More and more people are now taking their pets on holiday and facilities for pets are thus a consideration. For larger groups with children, camp beds or sofa beds can create more sleeping space.
It is important to keep the property well maintained as first impressions are vital. Welcome packages create a good first impression, providing essentials grocery and toiletries such as bread and milk and a bottle of wine for relaxation after travelling. Hiring a cleaner for change over is essential and consideration needs to be given to the handover of keys and security particularly if your holiday home is of considerable distance from your main home. A local manager may be necessary and there are many firms specialising in providing suitable services.
Personal or fragile items which you want for your own use should be stored away in a lockable cupboard, garage or outhouse to avoid the risk of breakages. You will also need to procure appropriate buildings, contents and public liability insurance, with many insurance firms offering policies specifically tailored to the letting market.
Good communication with your guests will help them respect your property. It is also important to take a deposit and sign a contract as you would when booking package holidays. Breakages and damage should be covered within the contract.