Purchasing a holiday let on a sound financial basis is essential to achieving goals so it is important to take time to consider the numbers, in both purchase costs and running costs, and then the context of the overall goal of holiday home ownership.

What is the overall aim of the purchase? Is the property being purchased:

• As a long term asset as part of a retirement plan.
• For medium term capital growth.
• A short term return on investment, as an alternative to a savings account.

A family holiday home which is let for the majority of the year to cover the running costs.

These factors will help set the purchase budget for a holiday home upon which financing the property can be determined. A deposit and mortgage is the usual methodology and a good mortgage broker will be able to advise on available deals in the much reduced buy-to-let sector. There are other considerations on top of working out the purchase price:

Running costs: understanding the running costs of a holiday home on a monthly basis will help ensure the property meets it’s income targets. These include cleaning and changeover costs, utility bills and council tax or business rates, marketing costs or agency fees and repair and replacement costs.

Cash flow: the seasonal nature of holiday bookings and demand means that the income derived will fluctuate throughout the calendar year. So a contingency for paying bills and mortgage costs over the quieter periods needs to be considered.

Deposit and mortgages are not the only way to a holiday home purchase. Many new-build developments, especially in the current climate, have finance packages available for prospective purchases.

Many new build holiday developments are being built around the country providing an alternative way into ownership. Luxury lodges are typically cheaper than freehold and leasehold properties, and can offer letting and management advantages, such as on-site facilities such as a cafe, bar, pool or shop, peaceful settings, and an on-site meet and greet service. Finance packages for this type of property are often provided by the site, some of which included a guaranteed percentage return on investment for the first few years.