holidayhomeinformation.co.uk

About Holiday Homes

About Holiday Homes

Here at http://www.holidayhomeinformation.co.uk/ we hope to bring you the best information resource for those interested in buying a holiday home in the UK.

What is a holiday home?

We define a ‘holiday home' as one of two types:

• Properties bought by people to use for their own personal use, or that of their family, which are generally referred to as second homes, and
• Properties bought by people in order to rent them out to self-catering holiday makers, either as an investment that produces an income and/or to use them occasionally themselves

The second category, those properties rented out to holidaymakers, are those that we generally refer to as ‘holiday homes'.  The first category we call second homes though, confusingly, commentators also put buy-to-let properties in this category!

What makes a holiday home?

Whilst traditionally holiday homes were traditional cottages, they now come in all shapes and sizes, from chocolate box cottage to large historic houses, from lodges on holiday developments to expensive new build houses and apartments.

How many are there?

It is impossible to accurately estimate the number of holiday homes in the UK but what is certain is that the market has grown rapidly in recent years, as it has in overseas destinations such as Spain and the US, driven by a growing interest in property ownership, an aging population with the power to borrow or buy outright, and low interest rates.

Where are they?

The popular holiday areas - the South West, the Cotswolds, Norfolk Broads, Yorkshire Dales, the Lake District etc - probably have the lion's share of properties but more and more properties are being advertised in city locations such as London.

Why are people buying them?

There are five key reasons why people are investing in holiday homes:

• Investment - to buy further into the property market in the belief that they are investing in an asset that will go up in value
• For their own use - to have a property that they and their family can use for their own holidays, whilst still letting the property out to others to help cover the cost
• Retirement - a future home in a perfect place
• Income - to produce an income, though the increase in property prices has reduced the rental yield in recent years
• Tax - properties qualifying as Furnished Holiday Accommodation benefit from very attractive tax benefits

Who owns them?

There is no typical owner of a holiday home, though the profile is obviously weighted towards older people and those already owning their own home.  Many owners are young investors with portfolios of properties whilst many are elder couple who have bought their property with an eye to retirement.

Quality counts

The supply of self-catering property has increased greatly in the last few years, as has demand.  But whilst demand has increased expectations have outpaced these and customers paying £1000 or more for a week in a 2 bedroom cottage or apartment are demanding in what they expect - and are happy to let you know if what you have provided does not meet their expectations.  And the increase in supply and the ease of finding alternatives through the internet have meant that having a good quality product to offer is key to ensure good bookings and income.

What are the upsides?

Rental incomes can be very good on the right property in the right place and owners also get to use the property for their own breaks - combining an investment producing an income with a second ‘family home' and perhaps a retirement home for the future. In many instances the fact that the property can generate an income allows borrowers access to a larger mortgage and a better purchase. 

Having frequent property access allows owners to regularly check on the state of the property and there are no sale restrictions due to tenancy agreements if the property is being let out on along term basis.

There are some significant tax advantages, especially in Capital Gains Tax, over owning a second home that is not let out or that is let out on a long term basis and there is the potential to carve property out for Inheritance Tax purposes.  And by investing in holiday rental then owners are investing in a business since any subsequent sale can potentially be carried out with bookings in place to give confidence to the buyer about the income generating potential of the property - though obviously there are possible issues around marketing contracts.

What are the downsides?

Buying a holiday home is not something that anyone should do lightly - it is a big decision, a big commitment and, depending on your circumstances and future changes in interest rates etc, there are obviously risks involved. Whilst there are many upsides owning a holiday home comes with the issues of owning any property - things can go wrong - and comes with the added issues of customers and suppliers such as marketing agencies and cleaners.

And, whilst demand for UK holidays is expected to rise due to an improved climate, green concerns and terrorism worries, there is always the risk posed by that old friend, the weather.