Arguably the main difference between a holiday let and a buy-to-let property is the length of time you are allowed to let it for. That difference brings with it some attractive advantages, however.
To qualify as a holiday let, a property has to be available as a furnished holiday home for 210 days of the year and let for no fewer than 105. Holiday lets may only be let to an individual for a maximum of 31 days. You can’t, for example, use a property as a holiday let in the summer and look for a longer-term tenant to cover the winter months.
The upside is that the yield from a holiday let – provided good marketing keeps it full for a reasonable amount of the year – can be higher. There are tax advantages, too.
So how do you make the most of your holiday let? And how do you go about buying one?
Making a holiday let pay
The good news is that many people are ‘staycationing’ in the UK. That opens up opportunities for holiday lets, but it’s vital to remember that, for some, this is their only trip away all year and they look forward to it enormously.
It’s important to make sure the basics – reliable heating, Wi-Fi, TV, dishwasher, washing machine and dryer – are in place to help people enjoy their home from home. Also, don’t skimp on the quality of the furnishings and fittings; people look for a little luxury when they’re on holiday.
Think about the extras you can provide. Is it a seaside let? Make some beach equipment available. Will it be rented by families? Provide some board games. It’s also a good idea to have a welcome pack with information about local attractions and amenities.
When it comes to marketing, you can do it yourself or use an agency. Weigh up the costs – including the cost of your time – to decide what’s best for you.
Mortgages for holiday lets
Getting a mortgage for a holiday let is likely to be a bit more tricky than for your main residence or a buy-to-let property. Some lenders offer specialist products while others shy away from holiday lets. The expected rental income will play a factor in the lender’s decision.
You’ll generally need a substantial deposit – a minimum of 25% is likely, and you could be asked to put down up to 40%. Interest rates and fees are also likely to be a little higher than for a standard residential mortgage.
On the plus side, a holiday let isn’t subject to the changes to tax relief that have been applied to buy-to-let mortgages and, as it’s not looked on as a property investment but as a business venture, there is the chance to claim tax relief on certain costs.
Take advice from an independent mortgage advisor to work out the best approach – and get the best deal – for you.