Can I buy a house to rent as a Holiday Let?
With staycations seeming like the wiser choice for holiday goers this year, the prospect of buying a home to let out to people going on holiday may appear quite attractive to prospective landlords. In this article, we’ve put together some things you should consider before taking the plunge, as well as some useful tips to make your holiday let that much more appealing to potential customers.
What is the difference between a holiday let and a normal rental property?
The main difference is that a holiday let is classed as a business, rather than an investment, and so will be subjected to different tax than say a property you choose to rent out long term. Not only will a holiday let encounter different tax benefits or liabilities than a rental property, but it may be slightly more difficult to obtain a mortgage.
Since holiday lets are generally seasonal properties, lenders see these properties as more high-risk than a property that is rented for a long period of time. Because of this, lenders normally ask for a larger mortgage deposit of at least 25% and will likely ask for proof of your incomings to make sure that you can cover the cost of the property, should the rental income fall short.
Although getting a mortgage for your holiday let is the largest expense, it’s also worth being aware of additional expenses you might not have considered.
What are the additional costs to owning a holiday let?
Although buying a holiday let can be exciting and an extra source of income, it also comes with certain responsibilities that you’ll have to take on. When buying a holiday let, as with any other rental property, you’ll become the landlord of that property, and are therefore responsible for carrying out regular safety checks to make sure anyone who stays in your property is safe.
Not only will you need to carry out checks such as fire safety, gas, and electrics, but it will also be your responsibility to fully furnish the property you intend to let, as well as keeping on top of any refurbishments. This means you’ll be responsible for refreshing any paint jobs, keeping the garden clean, and even making sure that any small items like mugs have no chips in them. So, make sure you cost in both the big and small expenses when going over what you can and can’t afford to buy.
Tips for making the most of your holiday let
Since staycations are more popular than ever, holiday lets are becoming competitive - if you don’t wow potential holiday goers with your property, the chances are they might choose somewhere else to stay. We’ve come up with some tips on how to optimise your holiday let and make it that much more appealing to holidaymakers.
- Location is key - when choosing a holiday let, make sure you buy a property in a favourable location, such as the countryside or seaside as people are much more likely to go on holiday in these kinds of places, than say a standard in-city apartment.
- Decoration - making sure you have up-to-date, welcoming décor, that is both stylish and comfortable, can make the difference to potential renters.
- Market your property - if you want your holiday let to be a favourite among holiday goers, getting professional photos taken of your property, as well as investing in a website and advertisement for it, will make it stand out among competitors. However, this will also be another cost that you’ll need to factor in.
If you think buying a holiday let is something you’re interested in, but you don’t know where to begin, or what mortgage you’ll need, why not speak to one of our advisers who can answer any questions you might have.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
Your property may be repossessed if you do not keep up repayments on your mortgage.